8. Feith - The First State Sponsor of Mass IP Theft (Print)


 

 

NOTE 

THE FIRST “STATE SPONSOR OF MASS IP 
THEFT”:  

CHINA, SOVEREIGN IMMUNITY, AND 
UPHOLDING AMERICANS’ INTELLECTUAL 

PROPERTY RIGHTS 
 

Dore Feith* 

The government of China has long orchestrated a massive 
campaign to steal intellectual property (IP) from Americans, 
but few victims have been able to seek redress through civil 
litigation. A key reason is that U.S. law does not recognize a 
foreign government’s vicarious liability for such thefts. Even 
when liability can be established, China’s government has 
sovereign immunity from the jurisdiction of U.S. courts. This 
Note proposes a new legislative framework, including 
amendments to the Foreign Sovereign Immunities Act (FSIA), 
that would allow Americans to sue the Chinese government 
and collect Chinese state assets as damages for thefts of IP 
perpetrated for its benefit.  
 
This Note suggests two legislative steps: First, creating a new 
category—“state sponsors of mass IP theft”—modeled on the 
State Department’s state-sponsors-of-terrorism list, and 
designating China under it; second, amending the FSIA to: (i) 
deny sovereign immunity to designated state sponsors of mass 
IP theft in suits under federal and state laws protecting trade 
secrets, trademarks, patents, and copyrights; (ii) provide a 

 
* J.D. Candidate 2025, Columbia Law School; B.A. 2018, Columbia 

University. I thank the following people for their thoughtful comments: 
Professor Matthew Waxman, Professor Zohar Goshen, Adam Chan, David 
Feith, Sophia Stener, and the participants in the America in the World 
Consortium's 2024 Young Scholars Conference. 



  

826 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

federal private right of action that resets the statutes of 
limitations for those claims, and that recognizes the state 
sponsor’s liability for the actions of its agents—including spies 
and military operatives, government regulators, state-owned 
enterprises, nominally private companies under the control of 
the Chinese Communist Party, participants in talent 
recruitment programs, and non-traditional collectors; and, 
(iii) permit successful plaintiffs to enforce judgments by 
attaching commercial assets of the foreign state and its state 
companies. 
 
Introduction .......................................................................... 827 
I. “The Party Leads Everything”: The Problem of Chinese IP 

Theft and China’s Corporate Structure .................... 830 
II. Overview of the FSIA and Its State Sponsor of Terrorism 

Provisions ................................................................... 843 
A. FSIA Background ................................................. 843 
B. Section 1605A ....................................................... 847 
C. Section 1610 ......................................................... 848 

III. Proposal to Designate China a State Sponsor of Mass IP 
Theft and Amend the FSIA ....................................... 852 
A. Establish “State Sponsors of Mass IP Theft” 

Category ................................................................ 855 
B. Proposed § 1605C—Mass IP Theft Exception to the 

Jurisdictional Immunity of a Foreign State ....... 856 
C. Proposed Amendments to FSIA § 1610 ............... 863 
D. Section 1610(g) and State Corporate Law .......... 865 

IV. International Law and Strategic Considerations ......... 867 
A. International Law ................................................ 867 
B. Strategic Considerations ..................................... 871 

i. Reactions from U.S. Businesses ..................... 871 
ii. Reactions from China ..................................... 872 

Conclusion ............................................................................. 874 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 827 

INTRODUCTION 
 

The government of China has long orchestrated a massive 
campaign to steal intellectual property (IP) from Americans, 
yet when the victims discover the harm, they cannot sue the 
Chinese government. U.S. law does not recognize a foreign 
government’s vicarious liability for such thefts. Even when 
liability can be established, China’s government has sovereign 
immunity from the jurisdiction of U.S. courts. This Note 
proposes new federal legislation to create vicarious liability 
for China and any other “state sponsor of mass IP theft”—a 
proposed new legal category—for the thefts that they 
orchestrate. A foreign state so designated would lose 
sovereign immunity for theft of U.S. trade secrets, 
trademarks, patents, and copyrights. Modeled on remedies for 
U.S. victims of terrorist attacks supported by state sponsors 
of terrorism (SSTs),1 the proposed legislation would allow U.S. 
judgment holders to enforce against the assets of both the 
Chinese government and its state-owned enterprises (SOEs).  

China’s state sponsorship of mass IP theft is without 
precedent.2 “One of the largest transfers of wealth in history,” 
the theft of up to $600 billion per year3 of U.S. companies’ IP 
is central to the Chinese Communist Party’s “generational 
fight to surpass [the United States] in economic and 

 
1 “SST” refers to the State Department’s list of state sponsors of 

terrorism mentioned in the Foreign Sovereign Immunities Act. It is not an 
official acronym. See Melissa Sanford, “This is a Game”: A History of the 
Foreign Terrorist Organization and State Sponsors of Terrorism Lists and 
their Applications, 13 HIST. MAKING 139, 146 n.12 (2020). 

2 NAT’L BUREAU OF ASIAN RSCH., THE IP COMMISSION REPORT: THE 
REPORT OF THE COMMISSION ON THE THEFT OF AMERICAN INTELLECTUAL 
PROPERTY 1, 10 (2013) [hereinafter IP COMMISSION REPORT 2013]; OFF. OF 
THE U.S. TRADE REPRESENTATIVE, FINDINGS OF THE INVESTIGATION INTO 
CHINA’S ACTS, POLICIES, AND PRACTICES RELATED TO TECHNOLOGY TRANSFER, 
INTELLECTUAL PROPERTY, AND INNOVATION UNDER SECTION 301 OF THE TRADE 
ACT OF 1974, at 17 (2018) [hereinafter USTR SECTION 301 REPORT 2018].  

3 NAT’L BUREAU OF ASIAN RSCH., UPDATE TO THE IP COMMISSION REPORT: 
THE THEFT OF AMERICAN INTELLECTUAL PROPERTY—REASSESSMENTS OF THE 
CHALLENGE AND UNITED STATES POLICY 1 (2017) [hereinafter UPDATE TO THE 
IP COMMISSION REPORT 2017]. 



  

828 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

technological leadership.”4 Beijing’s theft violates Americans’ 
property rights, discourages innovation, and damages the 
economy and national security of the United States.5 
Americans can file civil suits against people who 
misappropriate their trade secrets and otherwise steal IP, but 
they cannot sue China’s government because U.S. courts do 
not have subject-matter jurisdiction over foreign states except 
in narrow circumstances.6 Congress, however, could amend 
the Foreign Sovereign Immunities Act (“FSIA,” or “the Act”) 
to confer jurisdiction on the courts so that Americans can hold 
the Chinese government, including the ruling Chinese 
Communist Party (CCP, or “the Party”) and its organs of state 
(collectively, “the Party-state” or “Beijing”), accountable for IP 
theft.  

This Note proposes two legislative steps: first, creating a 
new category—state sponsors of mass IP theft—modeled on 
the State Department’s SST list,7 and designating China 
 

4 Christopher Wray, The Threat Posed by the Chinese Government and 
the Chinese Communist Party to the Economic and National Security of the 
United States, Fed. Bureau Investigation (July 7, 2020), 
https://www.fbi.gov/news/speeches/the-threat-posed-by-the-chinese-
government-and-the-chinese-communist-party-to-the-economic-and-
national-security-of-the-united-states [https://perma.cc/4LFK-R8W8]; see 
USTR SECTION 301 REPORT 2018, supra note 2, at 153 (“For over a decade, 
the Chinese government has conducted and supported cyber intrusions into 
U.S. commercial networks . . . gain[ing] unauthorized access to a wide range 
of commercially-valuable business information, including trade secrets, 
technical data, negotiating positions, and sensitive and proprietary internal 
communications.”). 

5 See IP COMMISSION REPORT 2013, supra note 2, at 1–2, 10 (“IP theft is 
now a national security issue.”); OFF. THE NAT’L COUNTERINTELLIGENCE 
EXEC., FOREIGN SPIES STEALING US ECONOMIC SECRETS IN CYBERSPACE, 
REPORT TO CONGRESS ON FOREIGN ECONOMIC COLLECTION AND INDUSTRIAL 
ESPIONAGE, 2009–2011 i (2011) [hereinafter NAT’L COUNTERINTELLIGENCE 
EXECUTIVE REPORT 2011] (“Chinese actors are the world’s most active and 
persistent perpetrators of economic espionage.”).  

6 See 28 U.S.C. § 1604. 
7 See State Sponsors of Terrorism, U.S. Dep’t of State (last visited Oct. 

6, 2024), https://www.state.gov/state-sponsors-of-terrorism/ 
[https://perma.cc/7VEY-TGHS] (“Countries determined by the Secretary of 
State to have repeatedly provided support for acts of international terrorism 
are designated pursuant to three laws: section 1754(c) of the National 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 829 

under it; second, amending the FSIA to: (i) deny sovereign 
immunity to designated state sponsors of mass IP theft in 
suits under federal and state laws protecting trade secrets, 
trademarks, patents, and copyrights; (ii) provide a federal 
private right of action for those claims that imposes liability 
on the state sponsor for its agents’ actions; and (iii) permit 
successful plaintiffs to enforce judgments by attaching 
commercial assets of the foreign state and its SOEs. 

Though an old principle in the law of nations, the sovereign 
immunity doctrine has evolved with developments in 
international economics and diplomacy.8 In the 1990s, 
Congress determined that SSTs should no longer enjoy 
sovereign immunity in U.S. courts. Congress disapproved of 
states that consider terrorism “a legitimate instrument of 
achieving their foreign policy goals.”9 Congress can now use 
similar measures to declare its disapproval of states that 
consider mass IP theft a legitimate governmental instrument. 

China steals IP to build its economic might, develop 
technologies at home, and gain an edge in its strategic 
competition against the United States.10 Stripping China of 
immunity for such IP thefts would give Americans a remedy 
for the violation of their property rights. It could also 
incentivize the CCP to change its policy of IP theft. It would 
be ideal if the CCP ended this practice entirely and respected 
IP rights in China and abroad, but that is unlikely to occur. 
Changing U.S. law on sovereign immunity may cause the CCP 
to instruct its companies to remove their assets from within 
the reach of U.S. courts. This would not insulate them 
entirely, however, because U.S. judgment holders would still 
be able to attach commercial payments owed to China’s 
government and state enterprises.11 Though Chinese firms 

 
Defense Authorization Act for Fiscal Year 2019, section 40 of the Arms 
Export Control Act, and section 620A of the Foreign Assistance Act of 
1961[].”). 

8 See infra Part II; Section IV.A.  
9 H.R. REP. NO. 104–383, at 62 (1995); see infra Part II. 
10 See infra Part I. 
11 See infra note 133 and accompanying text. 



  

830 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

have recently reduced their presence in the United States,12 it 
could be many years before they are generally beyond the 
reach of U.S. court orders. 

Part I of this Note reviews the CCP’s policy of stealing U.S. 
IP and elaborates on the CCP’s role in China’s economy. It 
summarizes how the Party advances its interests through the 
state, SOEs, private companies, and individuals. Part II 
reviews how Congress amended the FSIA to allow Americans 
to sue SSTs. Part III lays out the proposal for designating 
China a state sponsor of mass IP theft and suggests language 
for an amendment to the FSIA that would allow Americans to 
hold China’s government accountable for stealing their 
intellectual property. Part IV explains how this proposal is 
consistent with international law principles. It also addresses 
policy considerations. 
 

I. “THE PARTY LEADS EVERYTHING”13: THE 
PROBLEM OF CHINESE IP THEFT AND CHINA’S 

CORPORATE STRUCTURE 
 

“China is the world’s largest source of IP theft.”14 For 
decades, to reduce its dependence on foreign technologies, 
China’s industrial policies have encouraged trade secret 
misappropriation and infringement on trademarks, 
copyrights, and patents.15 The strategy is straightforward: 
“Rob the American company of its intellectual property, 
 

12 Thilo Hanemann, Armand Meyer & Danielle Goh, Vanishing Act: The 
Shrinking Footprint of Chinese Companies in the US, RHODIUM GRP. (Sept. 
7, 2023), https://rhg.com/research/vanishing-act-the-shrinking-footprint-of-
chinese-companies-in-the-us [https://perma.cc/XKE6-BJZC] (noting that in 
2021, Chinese businesses held $282 billion in assets in the United States); 
see infra Section IV.B. 

13 RUSH DOSHI, THE LONG GAME: CHINA’S GRAND STRATEGY TO DISPLACE 
AMERICAN ORDER 26 (2021) (citations omitted) (quoting Xi Jinping in 2017 
and Mao Zedong). 

14 IP COMMISSION REPORT 2013, supra note 2, at 2. 
15 See generally id. at 3; USTR SECTION 301 REPORT 2018, supra note 2, 

at 10–18; U.S. INT’L TRADE COMM’N, CHINA: EFFECTS OF INTELLECTUAL 
PROPERTY INFRINGEMENT AND INDIGENOUS INNOVATION POLICIES ON THE U.S. 
ECONOMY, at xv (2011) [hereinafter U.S. I.T.C. REPORT 2011]. 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 831 

replicate the technology, and replace the American company 
in the Chinese market and, one day, the global market.”16 This 
is one component in the Party’s grand strategy to modernize 
China’s economy, achieve “national rejuvenation” by 2049, 
and replace the United States as the world’s dominant 
power.17 

The United States has faced economic espionage before.18 
“What is new,” however, “is that unfair trade, security and 
industrial policies, tolerable in a smaller developing economy, 
are now combined with China’s immense, government-
directed investment and regulatory policies to put foreign 
firms at a disadvantage.”19 The U.S. International Trade 
Commission reported that in 2009 alone, U.S. IP-intensive 
firms lost $48.2 billion due to Chinese infringement of their IP 
rights.20 Trademark infringement was the most common 
offense, while copyright infringement did the most economic 
damage.21 In 2011, the Office of the National 
Counterintelligence Executive concluded that “Chinese actors 
are the world’s most active and persistent perpetrators of 
economic espionage.”22 In 2015, China’s State Council 
unveiled the “Made in China 2025” initiative to develop ten 
strategic industries—equally a “roadmap to theft as it is 
 

16 China’s Non-Traditional Espionage Against the United States: The 
Threat and Potential Policy Responses: Hearing Before the S. Comm. on the 
Judiciary, 115th Cong. 5 (2018) (statement of John C. Demers, Assistant 
Att’y Gen., Nat’l Sec. Div., U.S. Dep’t of Just.) [hereinafter Demers 
Testimony]. 

17 DOSHI, supra note 13, at 4. 
18 China’s Non-Traditional Espionage Against the United States: The 

Threat and Potential Policy Responses: Hearing Before the S. Comm. on the 
Judiciary, 115th Cong. 2 (2018) (statement of Peter Harrell, Adjunct Senior 
Fellow, Ctr. for a New Am. Sec.) [hereinafter Harrell Testimony]. 

19 USTR SECTION 301 REPORT 2018, supra note 2, at 17 (quoting James 
Lewis from the Center for Strategic and International Studies) (“The 
fundamental issue for the U.S. and other western nations, and the IT sector 
is how to respond to a managed economy with a well-financed strategy to 
create a domestic industry intended to displace foreign suppliers.”). 

20 U.S. I.T.C. REPORT 2011, supra note 15, at 3-1. 
21 Id. at xvi, 3-1. 
22 NAT’L COUNTERINTELLIGENCE EXECUTIVE REPORT 2011, supra note 5, 

at i. 



  

832 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

guidance to innovate,” according to the Assistant Attorney 
General for the National Security Division.23 A 2017 study 
estimated that IP theft costs the U.S. economy between $225 
billion and $600 billion annually.24  

The CCP dominates the Chinese Party-state.25 “The Party 
sits above the state, runs parallel to the state, and is 
enmeshed in every level of the state,” wrote Rush Doshi, who 
went on to serve as China director on President Biden’s 
National Security Council staff.26 China’s judiciary is also 
subordinate to the CCP. The president of China’s highest 
court has stated that “the courts should serve the Chinese 
Communist Party and industrial policy goals.”27 General 
Secretary Xi Jinping echoed Mao at the 19th Party Congress 
in 2017, saying: “Party, government, military, civilian, and 
academic, north, south, east, west, and center, the Party leads 
everything.”28  

The Party blurs the line between public and private 
commercial activity. Since 2016, Xi has increased the Party’s 
control over state-owned firms and nominally private 
companies, such as Alibaba and Tencent.29 China’s nearly one 
 

23 Demers Testimony, supra note 16, at 2. 
24 UPDATE TO THE IP COMMISSION REPORT 2017, supra note 3, at 1.  
25 SUSAN V. LAWRENCE & MARI Y. LEE, CONG. RSCH. SERV., R46977, 

CHINA’S POLITICAL SYSTEM IN CHARTS: A SNAPSHOT BEFORE THE 20TH PARTY 
CONGRESS 1 (2021) (explaining the concept of a Leninist “Party-state”); see 
generally U.S. Investment in China’s Capital Markets and Military-
Industrial Complex: Hearing Before the U.S.-China Econ. and Sec. Rev. 
Comm’n, 117th Cong. 170 (2021) (statement of Jason Arterburn, Program 
Dir., Ctr. for Advanced Def. Stud.) [hereinafter Arterburn Testimony] 
(“[W]hen Chinese companies pursue globalization today, they do so with 
complex relationships to the Chinese party-state that defy simple 
categorizations as ‘state-owned’ or ‘private.’”). 

26 DOSHI, supra note 13, at 35. 
27 OFF. OF THE U.S. TRADE REPRESENTATIVE, 2023 SPECIAL 301 REPORT, 

at 45 (2023). 
28 DOSHI, supra note 13, at 26. 
29 Jude Blanchette, From “China Inc.” to “CCP Inc.”: A New Paradigm 

for Chinese State Capitalism, CHINA LEADERSHIP MONITOR (Dec. 2, 2020), 
https://www.prcleader.org/post/from-china-inc-to-ccp-inc-a-new-paradigm-
for-chinese-state-capitalism [https://perma.cc/FBM8-XUKG]; see also 
Edward White, Chinese Companies Revive Mao Zedong-era Militias, FIN. 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 833 

hundred SOEs are controlled by the State Council’s State-
owned Assets Supervision and Administrative Commission 
(SASAC).30 Top executives are appointed through “a highly 
institutionalized sharing arrangement between the Party and 
SASAC.”31 Each SOE might have hundreds or even thousands 
of subsidiaries, complicating foreigners’ understanding of 
ownership structures.32 State influence extends beyond SOEs 
and their subsidiaries. Under Xi, writes China scholar Jude 
Blanchette,  

[the] demarcations between ‘state-owned’ and private 
. . . have become obscured to the point of irrelevancy 
by a concerted effort to expand the role of the CCP 
throughout the economy, both public and private. 
Indeed, even after recognizing the limitations of 
Beijing’s influence over many company decisions, the 
problem remains that it is difficult (if not impossible) 
to delineate with any precision where CCP influence 
ends and where firm autonomy begins.33  

This “new political-economic order” is unique to China,34 so 
it is not surprising that U.S. law inadequately accounts for 
how the CCP marshals state tools to undermine U.S. IP 
rights.  

China employs a “multifaceted approach” to IP theft.35 
Spies and military operatives, government regulators, SOEs, 
 
TIMES (Feb. 19, 2024), https://www.ft.com/content/d6b2e4d6-2f84-4ef9-bf99-
10d76d92d045 [https://perma.cc/MY7J-SHWV]; see generally Scott 
Livingston, The New Challenge of Communist Corporate Governance, CTR. 
STRAT. & INT’L STUD. (Jan. 15, 2021), https://www.csis.org/analysis/new-
challenge-communist-corporate-governance [https://perma.cc/PMU2-
JHNA]. 

30 Directory, STATE-OWNED ASSETS SUPERVISION & ADMIN. COMM’N OF THE 
STATE COUNCIL, http://en.sasac.gov.cn/sasacdirectory.html (last visited Oct. 
6, 2024) (on file with the Columbia Business Law Review) [hereinafter 
SASAC Directory]. 

31 Curtis J. Milhaupt & Wentong Zheng, Beyond Ownership: State 
Capitalism and the Chinese Firm, 103 GEO. L.J. 665, 677 n.53 (2015). 

32 Arterburn Testimony, supra note 25, at 2. 
33 Blanchette, supra note 29.  
34 Id.  
35 Demers Testimony, supra note 16, at 3. 



  

834 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

CCP-controlled but nominally private companies, talent 
recruitment programs, and non-traditional collectors are all 
involved. Intelligence officers from the Ministry of State 
Security and People’s Liberation Army (PLA) perform 
economic espionage, stealing trade secrets through hacking 
and fraud and recruiting agents in the United States.36 A 
bombshell report in 2013 revealed that members of PLA Unit 
61398 had hacked 115 U.S.-based entities in strategically 
significant industries, including four “‘strategic emerging 
industries’ that China identified in its 12th Five-Year Plan.”37 
The following year, the Department of Justice charged five 
Unit 61398 officers with cyber intrusions and economic 
espionage against six U.S. companies with substantial 
business in China.38 The indictment alleged the PLA funneled 

 
36 See, e.g., Press Release, U.S. Dep’t of Just., Chinese Government 

Intelligence Officer Sentenced to 20 Years in Prison for Espionage Crimes, 
Attempting to Steal Trade Secrets from Cincinnati Company (Nov. 16, 
2022), https://www.justice.gov/opa/pr/chinese-government-intelligence-
officer-sentenced-20-years-prison-espionage-crimes-attempting 
[https://perma.cc/7BH7-72QZ]; Press Release, U.S. Dep’t of Just., Chinese 
National Sentenced to Eight Years for Acting Within the United States as 
an Unregistered Agent of the People’s Republic of China (Jan. 25, 2023), 
https://www.justice.gov/opa/pr/chinese-national-sentenced-eight-years-
acting-within-united-states-unregistered-agent-people 
[https://perma.cc/7ZYQ-Q42J] (“This tasking was part of an effort by the 
[Ministry of State Security] to obtain access to advanced aerospace and 
satellite technologies being developed by companies within the U.S.”); Press 
Release, U.S. Dep’t of Just., Chinese Intelligence Officers and Their 
Recruited Hackers and Insiders Conspired to Steal Sensitive Commercial 
Aviation and Technological Data for Years (Oct. 30, 2018), 
https://www.justice.gov/opa/pr/chinese-intelligence-officers-and-their-
recruited-hackers-and-insiders-conspired-steal [https://perma.cc/PA8S-
GRYJ].  

37 USTR SECTION 301 REPORT 2018, supra note 2, at 155–56; see also 
Press Release, U.S. Dep’t of Just., U.S. Charges Five Chinese Military 
Hackers for Cyber Espionage Against U.S. Corporations and a Labor 
Organization for Commercial Advantage (May 19, 2014), 
https://www.justice.gov/opa/pr/us-charges-five-chinese-military-hackers-
cyber-espionage-against-us-corporations-and-labor [https://perma.cc/JWJ2-
QVBM] (charging five Unit 61398 officers for hacking Westinghouse, U.S. 
Steel, Alcoa, and three other U.S. companies). 

38 USTR SECTION 301 REPORT 2018, supra note 2, at 157. 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 835 

the stolen data and trade secrets to the U.S. companies’ 
Chinese competitors, including SOEs.39 

Other hackers are less obviously affiliated with the 
Chinese government, though researchers have grounds to 
believe that they are tools of the state. For example, one 
anonymous group known as APT10 appears to be a Chinese 
cyber espionage group that has targeted sectors important to 
China’s 13th Five Year-Plan.40  

Chinese government regulators and licensing officials 
coerce U.S. companies to transfer technology to them—and 
then reportedly siphon off that know-how to local 
competitors.41 For some companies, turning over such 
material is a precondition for entering the market, though 
these “[i]nformation disclosure and expert panel review 
requirements can arise at any stage of a company’s operations 
in China” across many industries.42 “Expert panels” 
comprising representatives from industry, research 
institutions, and government have been suspected of passing 
to local competitors precise information about business plans 
and manufacturing methods—which may constitute trade 
secrets—that they demand from U.S. firms.43  

Civil regulators intimidate companies that try to vindicate 
their IP rights. In one instance, antitrust regulators raided 

 
39 Id. at 158; cf. Ionut Arghire, Chinese Hackers Targeted International 

Aerospace Firms for Years, SEC. WEEK (Oct. 18, 2019), 
https://www.securityweek.com/chinese-hackers-targeted-international-
aerospace-firms-years/ [https://perma.cc/N6Q9-ASSX] (Crowdstrike report 
alleged that a SOE, Commercial Aircraft Corporation of China (COMAC), 
benefitted from Chinese Ministry of State Security hacks of U.S. aerospace 
companies). 

40 USTR SECTION 301 REPORT 2018, supra note 2, at 169–70; see 
generally PWC & BAE SYSTEMS, OPERATION CLOUD HOPPER, at 13 (2021) 

41 Lingling Wei & Bob Davis, How China Systematically Pries 
Technology from U.S. Companies, WALL ST. J. (Sept. 26, 2018), 
https://www.wsj.com/articles/how-china-systematically-pries-technology-
from-u-s-companies-1537972066 (on file with the Columbia Business Law 
Review); USTR SECTION 301 REPORT 2018, supra note 2, at 42. 

42 USTR SECTION 301 REPORT 2018, supra note 2, at 42.  
43 Id.; Wei & Davis, supra note 41. 



  

836 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

the offices of a U.S. company and told it to drop a patent-
infringement suit it had filed against a Chinese competitor.44 

As the Unit 61398 operations show, SOEs can facilitate the 
military’s IP theft, but they also conduct their own. In what is 
believed to be the first U.S. federal criminal case against a 
Chinese SOE,45 Sinovel Wind Group Company Ltd. was 
convicted of trade secret theft for stealing “proprietary wind 
turbine technology” that ultimately cost U.S. firm ASMC 
“more than $1 billion in shareholder equity and almost 700 
jobs.”46 In another case, a SOE in the chemicals industry, 
Pangang Group, orchestrated the theft of DuPont’s 
proprietary manufacturing recipe for a valuable white 
pigment.47 DuPont had controlled one-fifth of the pigment’s 
$17 billion market.48 This was the first ever conviction for 
economic espionage under 18 U.S.C. § 1831, and the first time 
a foreign SOE was charged with that crime.49 

Non-state-owned companies also perpetrate IP theft for 
Beijing’s benefit. “In the context of Chinese state capitalism, 
private ownership does not mean autonomy from the state.”50 
The CCP exerts power over private companies via Party-state 
organs, subsidies, and extralegal control.51 U.S. electric car 
company Tesla recently alleged that its technology secrets 
were stolen by a Chinese firm that makes sensors for 
autonomous vehicles.52 That firm’s second largest shareholder 
 

44 Wei & Davis, supra note 41. 
45 U.S. DEP’T OF JUST., REPORT TO CONGRESS PURSUANT TO THE DEFEND 

TRADE SECRETS ACT 8 (2018) [hereinafter DOJ DTSA REPORT 2018]. 
46 Press Release, U.S. Dep’t of Just., Court Imposes Maximum Fine on 

Sinovel Wind Group for Theft of Trade Secrets (July 6, 2018), 
https://www.justice.gov/opa/pr/court-imposes-maximum-fine-sinovel-wind-
group-theft-trade-secrets [https://perma.cc/9N8B-R2KZ].  

47 IP COMMISSION REPORT 2013, supra note 2, at 39–40.  
48 Id. at 39. 
49 DOJ DTSA REPORT 2018, supra note 45, at 7.  
50 Milhaupt & Zheng, supra note 31, at 683. 
51 Id. 
52 Vishakha Saxena, Tesla Sues China Chip Designer for ‘Stealing Tech 

Secrets,’ ASIA FIN. (Sept. 6, 2023), https://www.asiafinancial.com/tesla-sues-
china-chip-designer-for-stealing-tech-secrets [https://perma.cc/N9LH-
ZJP3].  



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 837 

is Xiaomi, a leading electronics producer that became a direct 
Tesla competitor when it received permission from China’s 
central planners to manufacture electric vehicles—a “Made in 
China 2025” strategic resource.53 Though Xiaomi is not state-
owned, like nearly all of China’s largest private enterprises, it 
has a “founder or de facto controller” who “is currently or 
formerly a member of central or local Party-state 
organizations such as People’s Congresses and [Chinese] 
People’s Political Consultative Conferences [CPPCC].”54 
Xiaomi’s CEO has been a repeat delegate to the CPPCC.55 
Major companies Tencent, Baidu, and Lenovo have also sent 
their chief executives to those political bodies.56 Since the 
Biden administration, the Department of Energy considers 
current and former CPPCC members to be “senior . . . political 
figure[s]” in the Chinese government.57 

 
53 Id.; Kenji Kawase, “Made in China 2025” Thrives with Subsidies for 

Tech, EV Makers, ASIA NIKKEI (July 22, 2022), 
https://asia.nikkei.com/Business/Business-Spotlight/Made-in-China-2025-
thrives-with-subsidies-for-tech-EV-makers [https://perma.cc/9HJF-Z3ZB]; 
see generally Guo Wu Yuan Guan Yu Yin Fa 《Zhong Guo Zhi Zao 2025》
de Tong Zhi (国务院关于印发《中国制造2025》的通知) [Notice of the State 
Council on the Publication of “Made in China 2025”], GUO WU YUAN (国务院) 
[P.R.C. ST. COUNCIL] (May 8, 2015) (China) 
https://www.gov.cn/zhengce/content/2015-05/19/content_9784.htm 
[https://perma.cc/35HU-P4TH], translated in CTR. FOR SEC. & EMERGING 
TECH. (Mar. 8, 2022), https://cset.georgetown.edu/publication/notice-of-the-
state-council-on-the-publication-of-made-in-china-2025/ 
[https://perma.cc/H6DG-F9DJ]. 

54 Milhaupt & Zheng, supra note 31, at 684. 
55 Laurie Chen, At China Political Meeting, Internet Bosses Are Out, 

Chip Execs Are In, REUTERS (Mar. 3, 2023), 
https://www.reuters.com/technology/china-political-meeting-internet-
bosses-are-out-chip-execs-are-2023-03-03/ [https://perma.cc/R3X8-BU3P]. 

56 Shen Lu, China Favors Chips, AI Executives over Internet Tycoons at 
Top Political Meetings, WALL ST. J. (Mar. 5, 2023), 
https://www.wsj.com/articles/china-favors-chips-ai-executives-over-
internet-tycoons-at-top-political-meetings-eb1076f2 (on file with the 
Columbia Business Law Review). 

57 Interpretation of Foreign Entity of Concern, 89 Fed. Reg. 37079, 
37086 (May 6, 2024). 



  

838 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

Huawei, which has misappropriated IP for decades,58 
might be one of China’s best-known companies, but its ties to 
the Party are not as stark as those of its peers. Huawei is not 
state-owned but it receives generous state subsidies and 
maintains ties to China’s ruling party and China’s intelligence 
and military apparatuses.59 Huawei does not publicize 
whether its executives participate in formal Party functions,60 
though its founder and CEO attended the 12th National 
Congress of the CCP in 198261 and a former chairwoman had 
 

58 Press Release, U.S. Dep’t of Just., Chinese Telecommunications 
Conglomerate Huawei and Subsidiaries Charged in Racketeering 
Conspiracy and Conspiracy to Steal Trade Secrets (Feb. 13, 2020), 
https://www.justice.gov/opa/pr/chinese-telecommunications-conglomerate-
huawei-and-subsidiaries-charged-racketeering [perma.cc/2ZEF-FUZH]; see 
also Press Release, U.S. Dep’t of Just., Chinese Telecommunications Device 
Manufacturer and its U.S. Affiliate Indicted for Theft of Trade Secrets, Wire 
Fraud, and Obstruction Of Justice (Jan. 28, 2019), 
https://www.justice.gov/opa/pr/chinese-telecommunications-device-
manufacturer-and-its-us-affiliate-indicted-theft-trade [perma.cc/QZY8-
9EPC] (for stealing T-Mobile’s technology for developing a phone-testing 
robot called Tappy). 

59 MIKE ROGERS & C.A. DUTCH RUPPERSBERGER, H. PERMANENT SELECT 
COMM. ON INTELLIGENCE, INVESTIGATIVE REPORT ON THE U.S. NATIONAL 
SECURITY ISSUES POSED BY CHINESE TELECOMMUNICATIONS COMPANIES 
HUAWEI AND ZTE 21–35 (2012) [hereinafter ROGERS-RUPPERSBERGER 
REPORT]. The company “exhibits a pattern of disregard for the intellectual 
property rights of other entities and companies in the United States.” Id. at 
31. See also Milhaupt & Zheng, supra note 31, at 685; Press Release, U.S. 
Dep’t of Def., DOD Releases List of People’s Republic of China (PRC) 
Military Companies in Accordance With Section 1260H of the National 
Defense Authorization Act for Fiscal Year 2021 (Jan. 31, 2024), 
https://www.defense.gov/News/Releases/Release/Article/3661985/dod-
releases-list-of-peoples-republic-of-china-prc-military-companies-in-accord/ 
[perma.cc/NY96-2PJE] (Huawei participates in China’s Military-Civil 
Fusion strategy to help the People’s Liberation Army “acquire advanced 
technologies and expertise developed by PRC companies, universities, and 
research programs that appear to be civilian entities.”). 

60 Milhaupt & Zheng, supra note 31, at 684. 
61 Ren Zhengfei, Huawei’s founder and CEO, has not said anything 

about his role in the CCP since the 1982 National Congress. ROGERS-
RUPPERSBERGER REPORT, supra note 59, at 23; Mr. Ren Zhengfei, HUAWEI 
(last visited Oct. 6, 2024), https://www.huawei.com/en/executives/board-of-
directors/ren-zhengfei [perma.cc/ZGE6-TJM6].  



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 839 

previously worked for the Ministry of State Security.62 U.S. 
policymakers and law enforcement have long considered 
Huawei a tool of the CCP, and Huawei has used IP theft to 
drive its market performance.63 

Finally, China harvests IP also using “non-traditional 
collectors”64 such as researchers at companies and academic 
institutions and participants in “talent programs.”65 They also 
target strategically important sectors, including autonomous 
and clean-energy vehicles and agricultural technology. For 
instance, at least three Chinese nationals working for Apple’s 
self-driving car division have been accused of trade-secret 
theft in the last five years. One of them is a fugitive in China 

 
62 OPEN SOURCE CENTER, HUAWEI ANNUAL REPORT DETAILS DIRECTORS, 

SUPERVISORY BOARD FOR FIRST TIME 3 (2011), 
https://irp.fas.org/dni/osc/huawei.pdf [https://perma.cc/VG2S-LSJ3]. 

63 See generally ROGERS-RUPPERSBERGER REPORT, supra note 59; Sara 
Salinas, Six Top US Intelligence Chiefs Caution Against Buying Huawei 
Phones, CNBC (Feb. 15, 2018, 11:03 AM), 
https://www.cnbc.com/2018/02/13/chinas-hauwei-top-us-intelligence-chiefs-
caution-americans-away.html [https://perma.cc/Z95E-5L3W].  

64 Case Example: Insider Threat and Non-Traditional Collection, FED. 
BUREAU INVESTIGATION (2019) https://www.fbi.gov/file-repository/china-
case-example-corn-seeds-2019.pdf [https://perma.cc/B5NF-E9N6] (defining 
non-traditional collector as “an individual whose primary profession is not 
intelligence collection but who collects sensitive U.S. technologies and 
information on behalf of Chinese government entities.”); see generally 
Danielle Hayes, A Letter to the IC on Defining Non-Traditional Collection, 
37 AM. INTEL. J. 106 (2020). 

65 See Press Release, U.S. Dep’t of Just., Chinese National Sentenced for 
Economic Espionage Conspiracy (Apr. 7, 2022), 
https://www.justice.gov/opa/pr/chinese-national-sentenced-economic-
espionage-conspiracy [https://perma.cc/X4N2-8BUF]; Press Release, U.S. 
Dep’t of Just., One American and One Chinese National Indicted in 
Tennessee for Conspiracy to Commit Theft of Trade Secrets and Wire Fraud 
(Feb. 14, 2019), https://www.justice.gov/opa/pr/one-american-and-one-
chinese-national-indicted-tennessee-conspiracy-commit-theft-trade 
[https://perma.cc/CQS4-T9Z5]; see generally Eileen Guo, Jess Aloe & Karen 
Hao, The US Crackdown on Chinese Economic Espionage Is a Mess. We 
Have the Data to Show It, MIT TECH. REV. (Dec. 2, 2021), 
https://www.technologyreview.com/2021/12/02/1040656/china-initative-us-
justice-department/ [https://perma.cc/V6CQ-ZKK8] (organizing federal 
criminal prosecutions by defendants’ membership in talents programs). 



  

840 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

reportedly working as an executive at an electric-vehicle 
subsidiary of Baidu.66 Mo Hailong, an executive at a Chinese 
conglomerate with a corn seed subsidiary company, pleaded 
guilty to stealing inbred corn seeds, a trade secret belonging 
to Monsanto, from fields “for the purpose of transporting the 
seeds to [his employer] DBN in China.”67 In a separate matter, 
Xiang Haitao, an imaging scientist at Monsanto, pleaded 
guilty to economic espionage after federal investigators found 
that he had misappropriated a proprietary predictive 
algorithm for China’s benefit.68 

 What do U.S. companies do when they fall victim to 
these thefts? Risk of retaliation by Chinese regulators deters 
challenges to China’s unfair trade practices.69 Occasionally 
large companies have sued major competitors with an 
international presence.70 But for most, legal obstacles at 
several stages of litigation disincentivize filing claims in the 
first place. Service of process can be extremely difficult, if not 

 
66 Rohan Goswami & Kif Leswing, Ex-Apple Employee Accused of 

Stealing Trade Secrets Is Exec at Baidu Self-Driving Car Joint Venture, 
CNBC (May 16, 2023), https://www.cnbc.com/2023/05/16/ex-apple-
employee-accused-of-stealing-secrets-is-jidu-automotive-exec.html 
[https://perma.cc/DFY8-Y5JE]; see also Press Release, U.S. Dep’t of Just., 
Former Apple Employee Charged With Theft of Trade Secrets (May 16, 
2023), https://www.justice.gov/usao-ndca/pr/former-apple-employee-
charged-theft-trade-secrets [https://perma.cc/ZZ9E-YSMM].  

67 Press Release, U.S. Dep’t of Just., Chinese National Sentenced to 
Prison for Conspiracy to Steal Trade Secrets, (Oct. 5, 2016), 
https://www.justice.gov/opa/pr/chinese-national-sentenced-prison-
conspiracy-steal-trade-secrets [https://perma.cc/7T6P-JN8U].  

68 Press Release, U.S. Dep’t of Just., Chinese National Sentenced for 
Economic Espionage Conspiracy (Apr. 7, 2022), 
https://www.justice.gov/opa/pr/chinese-national-sentenced-economic-
espionage-conspiracy [https://perma.cc/5ZY8-UVKQ]. 

69 USTR SECTION 301 REPORT 2018, supra note 2, at 9; see Wei & Davis, 
supra note 41.   

70 See Rachel Lerman, Jury Awards T-Mobile $4.8M in Trade-Secrets 
Case Against Huawei, SEATTLE TIMES (May 18, 2017, 2:14 PM), 
https://www.seattletimes.com/business/technology/july-awards-t-mobile-
48m-in-trade-secrets-case-against-huawei/ [https://perma.cc/79CU-56M5] 
(the jury found liability only for breach of contract, though, and not for trade 
secrets misappropriation). 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 841 

impossible, despite the United States and China both being 
signatories of the Hague Service Convention.71 Papers naming 
the Chinese government as a defendant simply do not get 
served.72 When service is achieved, Chinese companies ignore 
discovery requests.73 Occasionally a judgment will be entered 
(by default judgment or otherwise), but even then, plaintiffs 
have a difficult time collecting.74 

 In sum, U.S. victims of China’s IP theft policies 
currently have little recourse other than to seek criminal 
enforcement of laws protecting IP rights. As U.S. law now 
stands, many victims of IP theft cannot bring claims against 
IP thieves operating out of China. So, the Chinese government 
sponsors a systematic, broad, abusive campaign to steal IP 
from Americans, and its victims have no civil recourse.  

Past suggestions to amend the FSIA to address malign 
Chinese activity have not borne fruit. The Countering 
Communist China Act, introduced in 2021, proposed stripping 
China of sovereign immunity for all legal claims.75 However, 
that bill would not impose vicarious liability on the Chinese 
government for the IP thieves operating under it. Frazier & 
 

71 See e.g., Femtometrix, Inc. v. Chongji Huang, No. SACV 22-01624-
CJC (KESx), 2023 U.S. Dist. LEXIS 26048 (C.D. Cal. Feb. 15, 2023) (order 
denying, inter alia, motion to dismiss for insufficiency, and approving 
alternative method of service); see generally KEVIN ROSIER, CHINA’S GREAT 
LEGAL FIREWALL: EXTRATERRITORIALITY OF CHINESE FIRMS IN THE UNITED 
STATES 4 (2015), https://www.uscc.gov/research/chinas-great-legal-firewall-
extraterritoriality-chinese-firms-united-states [https://perma.cc/GK7L-
T9S2]; Glenn Chafetz, How China’s Political System Discourages 
Innovation and Encourages IP Theft, SAIS REV. INT’L AFFS. (July 31, 2023), 
https://saisreview.sais.jhu.edu/how-chinas-political-system-discourages-
innovation-and-encourages-ip-theft/ [https://perma.cc/5XHP-VZG7].  

72 ROSIER, supra note 71, at 4–5. 
73 Id. at 4.  
74 See Cisco Sys., Inc. v. Shenzhen Usource Tech. Co., No. 5:20-cv-04773-

EJD, 2020 WL 5199434, at *11 (N.D. Cal. Aug. 17, 2020) (granting TRO and 
authorizing alternative service of process) (collecting cases showing 
difficulty of enforcing judgments against defendants located in China); see, 
e.g., Walters v. Indus. & Com. Bank of China, Ltd., 651 F.3d 280 (2d Cir. 
2011) (illustrating difficulty of enforcing a judgment against a foreign state). 

75 Countering Communist China Act, H.R. 4792, 117th Cong. (2021) 
§ 812.  



  

842 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

Frazier have suggested legislation that would allow the U.S. 
government to sue China for economic espionage that targets 
national security-related trade secrets and to execute 
judgments on U.S. debt instruments in China’s possession.76 
Their proposed “National Trade Secret Protection Strategy” 
would assign the U.S. government limited ownership rights in 
certain trade secrets developed by companies with which it 
had contracted. This would give the United States standing to 
bring civil actions over the theft of those trade secrets.77 By 
contrast, the proposal in this Note focuses on private 
companies’ path to civil recourse. China’s policies, however, 
often deter private companies from bringing claims against 
the state or its interests.78 Frazier & Frazier’s strategy could 
complement this Note’s proposal by empowering the United 
States to sue in some instances when private firms choose not 
to.79 

U.S. policymakers acknowledge the need to update U.S. 
laws and regulations in light of the CCP’s control over the 
Chinese state.80 In a 2024 final interpretive rule, the 
Department of Energy interpreted “government of a foreign 
country” to mean “[a] dominant or ruling political party (e.g., 
Chinese Communist Party (CCP)) of a foreign country.”81 
Recognizing the Party’s organizational structure, the 

 
76 Grant H. Frazier & Mark B. Frazier, Taming the Paper Tiger: 

Deterring Chinese Economic Cyber-Espionage and Remediating Damage to 
U.S. Interests Caused by Such Attacks, 30 S. CAL. INTERDISC. L.J. 33, 54–60 
(2020).  

77 See id. 
78 See, e.g., USTR SECTION 301 REPORT 2018, supra note 2, at 9; Wei & 

Davis, supra note 41. 
79 See Frazier & Frazier, supra note 76, at 54–60. 
80 See e.g., SELECT COMM. ON THE STRATEGIC COMPETITION BETWEEN THE 

UNITED STATES AND THE CHINESE COMMUNIST PARTY, RESET, PREVENT, 
BUILD: A STRATEGY TO WIN AMERICA’S ECONOMIC COMPETITION WITH THE 
CHINESE COMMUNIST PARTY 20–22 (2023); cf. Protecting American 
Intellectual Property Act of 2022, Pub. L. No. 117–336, 136 Stat. 6147 
(authorizing the President to sanction foreign persons who engaged in 
“significant theft of trade secrets of United States persons”). 

81 Interpretation of Foreign Entity of Concern, 89 Fed. Reg. 37079, 
37090 (May 6, 2024) (emphasis added). 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 843 

Department of Energy defined “senior foreign political 
figures” of China’s government to include “current members 
of the Chinese People’s Political Consultative Conference and 
current and former members of the Politburo Standing 
Committee, the Politburo, the Central Committee, and the 
National Party Congress.”82 This Note’s proposal would build 
on that concept from the Department of Energy. 

 
II. OVERVIEW OF THE FSIA AND ITS STATE 

SPONSOR OF TERRORISM PROVISIONS 
 

A. FSIA Background 
 

While foreign states typically enjoy immunity from civil 
lawsuits, the FSIA allows American victims of a terrorist act 
to sue the foreign state responsible for it, if that state was 
already designated an SST or was so designated as a result of 
the act.83 Another provision, added in 2016 over a presidential 
veto, allows a broader category of suits against foreign states, 
even non-SSTs, that cause injury or death by “an act of 
international terrorism in the United States.”84 Congress also 
gave special privileges to plaintiffs enforcing terrorism-
related judgments.85  

Enacted in 1976, the FSIA codified the common-law 
principle that, subject to certain exceptions, nations generally 
could not haul another sovereign into their courts.86 Foreign 
sovereign immunity is considered “a matter of grace and 
comity on the part of the United States.”87 The government, 

 
82 Id. Executives of major Chinese companies are members of the 

CPPCC and may therefore be captured by the Department of Energy’s 
definition. See supra notes 54–61 and accompanying text. 

83 28 U.S.C. § 1605A.  
84 28 U.S.C. § 1605B.  
85 28 U.S.C. § 1610(g). 
86 See, e.g., Rubin v. Islamic Republic of Iran, 583 U.S. 202, 208–09 

(2018); see generally Mark B. Feldman, Foreign Sovereign Immunity in the 
United States Courts 1976-1986, 19 VAND. J. TRANSNAT’L L. 19, 19–23 
(1986).  

87 Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 486 (1983). 



  

844 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

therefore, may determine its breadth. Before the FSIA’s 
enactment, courts had generally deferred, case by case, to the 
executive branch as to whether a foreign state enjoyed 
immunity.88 “Prior to 1952, the State Department generally 
held the position that foreign states enjoyed absolute 
immunity from all actions in the United States.”89 But that 
year the State Department changed its policy out of 
recognition that more foreign states were conducting 
commercial activity in the United States, so their American 
business partners should “have their rights determined in the 
courts.”90 For the following quarter century, the State 
Department typically granted foreign states immunity, 
though not in suits tied to their commercial acts.91 The FSIA 
made the doctrine of sovereign immunity more predictable, 
legislating a “careful balance between respecting the 
immunity historically afforded to foreign sovereigns and 
holding them accountable, in certain circumstances, for their 
actions.”92  

Today, the FSIA “provides the ‘sole basis’ for obtaining 
jurisdiction over a foreign sovereign in the United States.”93 
Generally, foreign states and their agencies and 
instrumentalities are not subject to the jurisdiction of U.S. 
courts (jurisdiction immunity)94 and their property cannot be 
attached to enforce judgments against them (execution, or 
judgment, immunity).95 There are exceptions to this general 
rule, however, including cases where the sovereign has waived 
immunity, engaged in a commercial activity in or affecting the 

 
88 Rubin, 583 U.S. at 208.  
89 Id. 
90 Id. (quoting J. Tate, Changed Policy Concerning the Granting of 

Sovereign Immunity to Foreign Governments, 26 DEPT. STATE BULL. 984, 985 
(1952)). 

91 Id. 
92 Id. at 208–09. 
93 Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 611 (1992) 

(citation omitted). 
94 28 U.S.C. § 1604. 
95 28 U.S.C. § 1609. 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 845 

United States, expropriated property, or committed certain 
tortious acts.96  

SOEs enjoy sovereign immunity under the FSIA. SOEs are 
“instrumentalit[ies],”97 which the Act includes in the statutory 
definition of “foreign state.”98 At the same time, 
instrumentalities are “juridical entities distinct and 
independent from their sovereign.”99 As such, the Supreme 
Court in Bancec instructed courts to “normally” treat 
instrumentalities as separate from the foreign state for 
purposes of liability.100 But this was merely a presumption 
and could be overcome. An instrumentality might be liable for 
a judgment against a foreign state when the latter “so 
extensively control[s]” the instrumentality “that a 
relationship of principal and agent is created,”101 or where 
upholding their separateness “would work fraud or 
injustice.”102 The Court did not establish a formula for 
assessing when to impose the state’s liability on the 
 

96 28 U.S.C. § 1605; see Aryeh S. Portnoy et al., The Foreign Sovereign 
Immunities Act: 2008 Year in Review, 16 L. & BUS. REV. AM. 179, 182 (2010). 

97 Dole Food Co. v. Patrickson, 538 U.S. 468, 477 (2003). 
98 28 U.S.C. § 1603(a). Section 1603 defines “agency or instrumentality” 

as distinct from “foreign state,” but also covered by the phrase “foreign 
state” in most of the statute:  

For purposes of this chapter— 
(a) A “foreign state”, except as used in section 1608 of this title, includes 

a political subdivision of a foreign state or an agency or instrumentality of 
a foreign state as defined in subsection (b).  

(b) An “agency or instrumentality of a foreign state” means any entity— 
(1) which is a separate legal person, corporate or otherwise, and 
(2) which is an organ of a foreign state or political subdivision 
thereof, or a majority of whose shares or other ownership interest 
is owned by a foreign state or political subdivision thereof, and 
(3) which is neither a citizen of a State of the United States as 
defined in section 1332 (c) and (e) of this title, nor created under 
the laws of any third country. 

Id. 
99 First Nat. City Bank v. Banco Para El Comercio Exterior de Cuba, 

462 U.S. 611, 627 (1983) [hereinafter Bancec].  
100 Id. 
101 Id. at 629. 
102 Id. at 630. 



  

846 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

instrumentality, but lower courts eventually developed a five-
factor test (known as the Bancec factors) to make that 
determination:  

1) the level of economic control by the government;  
2) whether the entity’s profits go to the government; 
3) the degree to which government officials manage 

the entity or otherwise have a hand in its daily 
affairs; 

4) whether the government is the real beneficiary of 
the entity’s conduct; and, 

5) whether adherence to separate identities would 
entitle that foreign state to benefits in United 
States courts while avoiding its obligations.103 

 
Years later, for enforcing terrorism-related judgments 

against SSTs, Congress specifically erased the line between 
foreign states and their instrumentalities.104 

In 1996 Congress added the exception for terrorism-related 
suits against SSTs.105 Lawmakers showed their willingness to 
strip states of their immunity when their national policies 
harmed Americans.106 Congress again amended the FSIA in 
2008, creating a federal private right of action against SSTs, 
providing for punitive damages, and facilitating the execution 
of judgments against SST properties.107 In 2016, another 

 
103 Rubin v. Islamic Republic of Iran, 583 U.S. 202, 210 (2018) (internal 

quotation marks omitted) (quoting Walter Fuller Aircraft Sales, Inc. v. 
Republic of Philippines, 965 F.2d 1375, 1380 n.7 (5th Cir. 1992)). 

104 28 U.S.C. § 1610(g); Rubin, 583 U.S. at 210–11; see infra notes 128–
33 and accompanying text. 

105 JENNIFER K. ELSEA, CONG. RSCH. SERV., RL31258, SUITS AGAINST 
TERRORIST STATES BY VICTIMS OF TERRORISM 1 (2008). 

106 Id. at 4–5; see Anti-Terrorism and Effective Death Penalty Act of 
1996, Pub. L. No. 104–132, § 221, 110 Stat. 1214, 1241 (1996); see also H.R. 
Rep. No. 104–383, at 62 (1995) (disapproving of states that consider 
terrorism “a legitimate instrument of achieving their foreign policy goals”). 

107 National Defense Authorization Act for Fiscal Year 2008, Pub. L. No. 
110–181, § 1083, 122 Stat. 3, 339–40; see 28 U.S.C. §§ 1605A(c), 1610(a)(7), 
1610(b)(3). 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 847 

amendment removed immunity for any state, not just SSTs, 
responsible for an act of terrorism within the United States.108 

The terrorism exception’s structure—particularly as 
amended in 2008, when Congress added §§ 1605A and 
1610(g)109—reflected Congress’s desire to allow Americans to 
sue and enforce judgments against SSTs more easily than 
would be possible against other kinds of foreign states.  

Congress could replicate much of the terrorism exception’s 
design to counter China’s mass IP theft. The following 
discussion reviews how to adapt those provisions to combat 
China’s IP theft. 

 
B. Section 1605A  

 
Section 1605A expanded the terrorism exception to 

jurisdictional immunity that was enacted in 1996, added a 
private cause of action against SSTs, and authorized punitive 
damages.110 Three elements must be proved to establish 
subject-matter jurisdiction under this section: (1) the foreign 
state had been designated a “state sponsor of terrorism” under 
relevant laws at the time of the act or as a result of it; (2) if 
the alleged act took place in the foreign state being sued, the 
plaintiff afforded that state reasonable time to arbitrate the 
claim; and (3) the claimant seeks money damages for 

personal injury or death that was caused by an act of 
torture, extrajudicial killing, aircraft sabotage, 
hostage taking, or the provision of material support or 
resources for such an act if such act or provision of 
material support or resources is engaged in by an 
official, employee, or agent of such foreign state while 

 
108 Justice Against Sponsors of Terrorism Act, Pub. L. No. 114–222, § 3, 

130 Stat. 852, 853 (2016).  
109 See ELSEA supra note 105, at 38–46 (summarizing additions of 28 

U.S.C. § 1605A and 28 U.S.C. § 1610(g) in the 2008 amendment). The 
Justice Against Sponsors of Terrorism Act of 2016, supra note 108, made 
additional changes that are not relevant here. 

110 Portnoy et al., supra note 96, at 201.  



  

848 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

acting within the scope of his or her office employment 
or agency.111 

The Act defines torture, extrajudicial killing, aircraft 
sabotage, hostage taking, and material support or resources 
based on their meanings in other parts of the U.S. Code and 
international conventions.112  

Section 1605A’s private right of action streamlined 
plaintiffs’ ability to bring suits. The 1996 SST exception “did 
not provide a cause of action against foreign states, but only 
waived immunity for terrorism-related claims.”113 This 
required plaintiffs to scour often inconsistent state laws for 
causes of action.114 Section 1605A replaced the state claims 
with a federal one for certain plaintiffs—U.S. nationals, 
members of the U.S. military, employees or contractors of the 
U.S. government, or their legal representative.115 Now those 
plaintiffs may hold an SST “vicariously liable for the acts of 
its officials, employees, or agents” who “act[ed] within the 
scope of [their] office” and caused “personal injury or death” 
by acts of terrorism.116 As for the applicable substantive law, 
courts look to “general principles of tort law” to determine 
liability and damages.117 
 

C. Section 1610 
 

For plaintiffs who bring § 1605A actions against SSTs, 
Congress also provided help in enforcing judgments.118 Under 

 
111 28 U.S.C. § 1605A(a)(1)–(2); see also DAVID P. STEWART, THE FOREIGN 

SOVEREIGN IMMUNITIES ACT: A GUIDE FOR JUDGES 102–03 (2d ed. 2018). 
112 28 U.S.C. § 1605A(h). 
113 Portnoy et al., supra note 96, at 200–01. 
114 Id. 
115 28 U.S.C. § 1605A(c); STEWART, supra note 111, at 107 (citing 

Fraenkel v. Islamic Republic of Iran, 248 F. Supp. 3d 21, 34 (D.D.C. 2017) 
(“For persons covered by the private right of action in 28 U.S.C. § 1605A(c) 
state law claims are not actionable.”)).  

116 28 U.S.C. § 1605A(c).  
117 STEWART, supra note 111, at 108, 118, 121, 123 and accompanying 

notes (collecting cases). 
118 See id. at 127. 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 849 

the FSIA, even when a foreign state does not have immunity 
from a U.S. court’s jurisdiction, the state’s property is 
presumptively immune from execution or attachment, subject 
to the exceptions enumerated in § 1610.119 Those include 
waiver, commercial activity (provided that there is a nexus 
between the property and the “commercial activity upon 
which the claim is based”), and expropriation (assuming the 
requisite nexus)—so long as the property is “used for a 
commercial activity in the United States.”120 For foreign 
states’ agencies and instrumentalities, judgment immunity is 
much narrower. If an agency or instrumentality is “engaged 
in commercial activity in the United States,” all its property 
in the United States is subject to execution and attachment.121 

Section 1610 provides § 1605A plaintiffs unique avenues 
for enforcing judgments. First, plaintiffs bringing claims 
against foreign states do not need to show a nexus between 
the property they seek to attach and the underlying claim.122 
Subsections 1610(a)(7) and (b)(3) provide that property used 
for a commercial activity can be attached to enforce a 
judgment against an SST or its instrumentality “regardless of 
whether the property is or was involved [with] the act upon 
which the claim is based.”123 Once a judgment against a 
foreign state or instrumentality is entered under § 1605A, all 
of its commercial property in the U.S. is available for 

 
119 28 U.S.C. § 1609; see also 28 U.S.C. §§ 1610, 1611 (§ 1611 specifies 

certain types of property immune from execution notwithstanding § 1610); 
see generally STEWART, supra note 111, at 127–28. The judgment creditor 
bears the burden to show a specific property satisfies a § 1610 exception. 
Courts may permit limited discovery to aid plaintiffs at this stage. Id. at 
128. 

120 28 U.S.C. § 1610(a). 
121 28 U.S.C. § 1610(b). 
122 28 U.S.C. § 1610(a)(7) (property used for a commercial activity in the 

United States “shall not be immune from attachment in aid of execution, or 
from execution, upon a judgment, if— . . . the judgment relates to a claim 
for which the foreign state is not immune under section 1605A . . ., 
regardless of whether the property is or was involved with the act upon which 
the claim is based” (emphasis added)); 28 U.S.C. § 1610(b)(3) (same, for 
claims against agencies and instrumentalities). 

123 28 U.S.C. § 1610(a)(7), (b)(3). 



  

850 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

execution. Second, § 1610(f)(1) “permit[s] execution against 
frozen or diplomatic assets of [SSTs],” subject to a presidential 
waiver.124 Section 1610(f)(2) directs the Treasury and State 
Departments “to fully, promptly, and effectively assist any 
judgment creditor or any court that has issued [a judgment 
under § 1605A and its predecessor] in identifying, locating, 
and executing against the property of that foreign state or any 
agency or any agency or instrumentality of such a state.”125 
The U.S. government has no such obligations for any other 
action brought via the FSIA.126 Congress further tried to 
broaden the scope of available blocked SST assets in the 
Terrorism Risk Insurance Act of 2002.127 

Third, and most significantly, § 1610(g) allows a § 1605A 
judgment holder to attach the property not just of the 
defendant SST, but also of its instrumentalities.128 This 
“abrogate[s]” Bancec’s presumption of independent status for 

 
124 STEWART, supra note 111, at 130–31; 28 U.S.C. § 1610(f). 
125 28 U.S.C. § 1610(f)(2)(A).  
126 The President waived (f)(1) immediately and it has never been 

operative. STEWART, supra note 111, at 130–31. 
127 Id. at 131–34; Pub. L. No. 107-297, § 201(a), 116 Stat. 2337 (2002) 
(codified at 28 U.S.C. § 1610 note). 
128 28 U.S.C. § 1610(g). Section 1610(g)(1) states:  
[T]he property of a foreign state against which a judgment is entered 

under section 1605A, and the property of an agency or instrumentality of 
such a state, including property that is a separate juridical entity or is an 
interest held directly or indirectly in a separate juridical entity, is subject 
to attachment in aid of execution, and execution, upon that judgment as 
provided in this section, regardless of— 

(A) the level of economic control over the property by the 
government of the foreign state; 
(B) whether the profits of the property go to that government; 
(C) the degree to which officials of that government manage the 
property or otherwise control its daily affairs;  
(D) whether that government is the sole beneficiary in interest of 
the property; or 
(E) whether establishing the property as a separate entity would 
entitle the foreign state to benefits in United States courts while 
avoiding its obligations. 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 851 

a foreign state’s “duly created instrumentalities.”129 For 
§ 1605A judgments, the Bancec factors130 are not necessary to 
pierce the corporate veil between state and SOE; there is no 
veil to begin with.131 This means such a judgment holder can 
attach not only the foreign state’s commercial property but 
also that of any of its SOEs. As the Supreme Court 
summarized:  

[p]rior to the enactment of § 1610(g), the plaintiffs 
would have had to establish that the Bancec factors 
favor holding the agency or instrumentality liable for 
the foreign state’s misconduct. With § 1610(g), 
however, the plaintiffs could attach and execute 
against the property of the state-owned entity 
regardless of the Bancec factors, so long as the 
plaintiffs can establish that the property is otherwise 
not immune (e.g., pursuant to § 1610(a)(7) because it 
is used in commercial activity in the United States).132 

Judgment holders are also entitled to seize cash owed by 
U.S. entities to the SST’s state-owned company. In one 
instance, a litigant against Iran, an SST, was able to enforce 
a small part of its judgment by garnishing a payment that the 
Sprint telephone company owed to an Iranian state 
telecommunications company.133  

Section 1610(g), combined with § 1605A’s terrorism 
exception to jurisdiction immunity, private right of action, and 
punitive damages, has the potential to impose significant 
costs on SSTs. Those provisions give American victims of 
state-sponsored terrorism legal vehicles to win and enforce 
judgments against their assailants, which imposes some 
financial costs on the countries who back terrorism against 
 

129 Rubin v. Islamic Republic of Iran, 583 U.S. 202, 211 (2018); Bancec, 
462 U.S. 611, 627 (1983); see generally STEWART, supra note 111, at 36–39.  

130 Supra note 103 and accompanying text; see generally Rubin, 583 U.S. 
at 210–11 (explaining provenance of Bancec factors).  

131 See Paula Kates, Immunity of State-Owned Enterprises: Striking a 
New Balance, 51 N.Y.U. J. INT’L L. & POL. 1223, 1226 (2019). 

132 Rubin, 583 U.S. at 213. 
133 Estate of Heiser v. Islamic Republic of Iran, 807 F. Supp. 2d 9 (D.D.C. 

2011) [hereinafter Heiser III]. 



  

852 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

the United States. In reality, though, SSTs maintain few 
assets in the United States, so Americans have had a difficult 
time enforcing judgments.134 In light of those obstacles, 
Congress has created alternative means for judgment holders 
to collect. It authorized them to attach SST assets that were 
frozen by the Treasury Department, and it established a 
victims’ fund out of the fines paid by sanctions violators and 
the proceeds from the sale of forfeited Iranian state 
property.135 That fund has awarded over $3 billion to 
claimants, though more than $107 billion remains 
outstanding.136 Nevertheless, the FSIA’s terrorism exceptions 
clearly deprive foreign governments responsible for killing 
and injuring Americans of the “grace and comity” that the 
sovereign immunity doctrine affords to all other states.137 
 

III. PROPOSAL TO DESIGNATE CHINA A STATE 
SPONSOR OF MASS IP THEFT AND AMEND THE 

FSIA 
 

This Note proposes legislation modeled on the terrorism 
exception to sovereign immunity to deter further state-
sponsored IP theft and to help Americans recover some of the 
value stolen from them. Even if only partially adopted, such 
legislation could benefit the public, so it helps to break down 
its component parts: 

1. Establish under U.S. law an official category of foreign 
state labeled “state sponsors of mass IP theft.” Induct 
China into it. Authorize the executive branch to 
conduct fact-finding to add or remove other countries. 

 
134 JENNIFER K. ELSEA, CONG. RSCH. SERV., IF10341, JUSTICE FOR UNITED 

STATES VICTIMS OF STATE SPONSORED TERRORISM ACT: ELIGIBILITY AND 
FUNDING 1 (2023). 

135 Id. at 1–2. 
136 Id. at 2. Congress might consider establishing a similar fund for 

judgment holders against state sponsors of mass IP theft, as a complement 
to this proposal. 

137 Verlinden B.V. v. Cent. Bank of Nigeria, 461 U.S. 480, 486 (1983).  



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 853 

2. Add a new section to the FSIA, § 1605C, entitled “Mass 
IP theft exception to the jurisdictional immunity of a 
foreign state.”138 This section would:  

a. remove immunity for state sponsors of mass IP 
theft in suits for money damages that arise 
from conduct by the state and its agents that 
would generate civil liability139 under the 
Economic Espionage Act (as amended),140 
Copyright Act (as amended),141 Patent Act (as 
amended),142 and Lanham Act (as amended);143 

b. create a federal private right of action that 
imposes vicarious liability on a state sponsor of 
mass IP theft for the actions of its officials or 
agents; 

c. define “agents” to include the foreign state’s 
military and intelligence services; state-owned 
enterprises and any subsidiaries; companies 
controlled by a foreign state’s dominant or 
ruling political party (e.g., the Chinese 
Communist Party),144 including members of 
central or local party state organizations (e.g., 
National People’s Congress, Chinese People’s 

 
138 See 28 U.S.C. §§ 1605A (“Terrorism exception to the jurisdictional 

immunity of a foreign state”), 1605B.  
139 See BRIAN T. YEH, CONG. RSCH. SERV., RL34109, INTELLECTUAL 

PROPERTY RIGHTS VIOLATIONS: FEDERAL CIVIL REMEDIES AND CRIMINAL 
PENALTIES RELATED TO COPYRIGHTS, TRADEMARKS, PATENTS, AND TRADE 
SECRETS (2016). 

140 18 U.S.C. § 1836(b). The Defend Trade Secrets Act of 2016 amended 
the Economic Espionage Act to add a federal private right of action for trade 
secret misappropriation. Defend Trade Secrets Act, Pub. L. No. 114–153, 
130 Stat. 376 (2016). 

141 E.g., 17 U.S.C. §§ 501, 504–05, 1203; 18 U.S.C. § 2318(e)(1). 
142 E.g., 35 U.S.C. §§ 271, 281–97.  
143 E.g., 15 U.S.C. §§ 1114(1), 1125(a), 1125(c)–(d), 8131; 19 U.S.C. 

§§ 1526(3). 
144 Cf. Interpretation of Foreign Entity of Concern, 89 Fed. Reg. 37079, 

37090 (May 6, 2024). 



  

854 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

Political Consultative Conferences);145 
companies like Huawei, which have corporate 
structures by which the dominant or ruling 
political party (e.g., CCP) of a foreign country 
exerts influence or control; and individuals 
acting for the benefit of a foreign government, 
foreign instrumentality, or foreign agent (as 
defined in the Economic Espionage Act);146 and 

d. permit retroactive suits, going back to 
September 25, 2015, when U.S. President 
Barack Obama and CCP General Secretary Xi 
Jinping announced, in President Obama’s 
words, that China will no longer “knowingly 
support cyber-enabled theft of intellectual 
property, including trade secrets or other 
confidential business information for 
commercial advantage.”147 For thefts conducted 
after this proposal’s enactment, the underlying 
law will determine the applicable limitations 
period. 

 
145 See generally Milhaupt & Zheng, supra note 31, at 684 (“Based on 

publicly available information, we identified ninety-five out of the top one 
hundred private firms and eight out of the top ten Internet firms whose 
founder or de facto controller is currently or formerly a member of central 
or local party-state organizations such as People’s Congresses and People’s 
Political Consultative Conferences.”). 

146 “(1) the term ‘foreign instrumentality’ means any agency, bureau, 
ministry, component, institution, association, or any legal, commercial, or 
business organization, corporation, firm, or entity that is substantially 
owned, controlled, sponsored, commanded, managed, or dominated by a 
foreign government; (2) the term ‘foreign agent’ means any officer, 
employee, proxy, servant, delegate, or representative of a foreign 
government.” 18 U.S.C. § 1839. 

147 Press Release, The White House Off. of the Press Sec., Remarks by 
President Obama and President Xi of the People’s Republic of China in Joint 
Press Conference (Sept. 25, 2015), 
https://obamawhitehouse.archives.gov/the-press-
office/2015/09/25/remarks-president-obama-and-president-xi-peoples-
republic-china-joint [https://perma.cc/CYX4-6XLM] [hereinafter Obama-Xi 
Joint Press Conference].  



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 855 

3. Amend § 1610 to add a state sponsor of mass IP theft 
exception to immunity from attachment or execution. 
Congress may: 

a. add a new subsection, § 1610(a)(8), to eliminate 
immunity for property of a foreign state used in 
commercial activity in the United States to 
enforce a § 1605C judgment;148  

b. add another new subsection, § 1610(b)(4), to 
eliminate immunity for any property of a 
foreign state’s agency or instrumentality 
engaged in commercial activity in the United 
States to enforce a § 1605C judgment;149 and 

c. apply § 1610(g)(1) to § 1605C judgments, 
permitting judgment holders against state 
sponsors of mass IP theft to attach the property 
of both the foreign state and its instrumentality 
regardless of the Bancec factors.150 Subsection 
(g)(2) would also need a parallel reference to 
§ 1605C. 

 
A.  Establish “State Sponsors of Mass IP Theft” Category 
 

Creating a list of state sponsors of mass IP theft would 
recognize that these infringements are not unrelated crimes 
but part of a campaign by a state that sees theft as “a 
legitimate instrument of achieving [its] foreign policy 
goals.”151 This list is an analog to the SST list that has existed 
since 1979, which imposes four kinds of sanctions on countries 
included therein.152 Sanctions need not automatically attach 
to a state sponsor of mass IP theft, and the prudence of pairing 
sanctions to the list is beyond the scope of this Note.  

 
148 Compare 28 U.S.C. § 1610(a)(7). 
149 Compare 28 U.S.C. § 1610(b)(3). 
150 See 28 U.S.C. § 1610(g). 
151 H.R. REP. NO. 104–383, at 62 (1995) (referring to terrorism). 
152 State Sponsors of Terrorism, supra note 7; Sanford, supra note 1, at 

146. 



  

856 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

Congress should, by law, designate that China is a state 
sponsor of mass IP theft and authorize the Secretary of State 
to maintain the list and determine which other countries, if 
any, should be added or removed. China would be removable 
only by statute. The State Department maintains the SST list, 
consistent with the Department’s role in controlling exports of 
sensitive items and technologies.153 Mass IP theft involves 
criminal law, trade policy, industrial security, military 
technology controls, and cybersecurity. Diplomatic 
considerations are also relevant. There are grounds, therefore, 
to authorize the Secretary of State to maintain the list, but an 
alternative could be the Attorney General, who already 
reports biannually to Congress on the “scope and breadth of 
the theft of trade secrets” by foreign actors.154 Congress could 
require the Secretary of State to consult with the Attorney 
General, Director of the Federal Bureau of Investigation, 
Secretary of Defense, Director of National Intelligence, and 
other members of the interagency in maintaining the list. 
 

B.  Proposed § 1605C—Mass IP Theft Exception to the 
Jurisdictional Immunity of a Foreign State 

 
The proposed § 1605C would eliminate jurisdictional 

immunity for state sponsors of mass IP theft. Its federal right 
of action would allow a U.S. company to hold China 
vicariously liable for misappropriation of trade secrets and 
infringement on patents, trademarks, and copyrights 
perpetrated by Chinese officials and agents. The definition of 
“agent” should account for the many non-governmental ways 
that the CCP advances its interests. Intelligence and military 
operations155 would naturally give rise to claims, and so would 
activities conducted outside traditional government organs. 
This is essential to capturing China’s full range of tactics to 
steal IP. Here is proposed text for § 1605C, modeled on 

 
153 State Sponsors of Terrorism, supra note 7. 
154 Defend Trade Secrets Act of 2016, § 4(b), Pub. L. No. 114–153, 130 

Stat. 376, 383.  
155 See supra notes 35–40 and accompanying text. 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 857 

§ 1605A, followed by an explanation of certain terminology, 
along with some alternatives:  

§ 1605C. Mass IP theft exception to the 
jurisdictional immunity of a foreign state. 

(a) IN GENERAL. 
(1) NO IMMUNITY. A foreign state shall 
not be immune from the jurisdiction of 
courts of the United States or of the 
States in any case not otherwise covered 
by this chapter in which money damages 
are sought against a foreign state for any 
act giving rise to a private civil action 
under the Economic Espionage Act (as 
amended),156 Copyright Act (as 
amended),157 Patent Act (as 
amended),158 or Lanham Act (as 
amended),159 or under state laws 
protecting against trade secret 
misappropriation or infringement on 
patents, trademarks, or copyrights, if 
such act is engaged in by an official, 
employee, or agent, of such foreign state 
while acting within the scope of his or 
her office, employment, or agency.  
(2) CLAIM HEARD. The court shall hear a 
claim under this section if— 

(i) the claim alleges an act described 
in paragraph (1) that occurred after 
September 25, 2015, and before the 
enactment of this section, and the 
foreign state is designated a state 
sponsor of mass IP theft when the 
claim is filed or was so designated 

 
156 18 U.S.C. § 1836(b). The Defend Trade Secrets Act of 2016 amended 

the Economic Espionage Act to add a federal private right of action for trade 
secret misappropriation. Pub. L. 114–153, 130 Stat. 376. 

157 See e.g., 17 U.S.C. §§ 501, 504–05, 1203; 18 U.S.C. § 2318(e)(1). 
158 See e.g., 35 U.S.C. §§ 271, 281–97.  
159 See e.g., 15 U.S.C. §§ 1114(1), 1125(a), 1125(c)–(d), 8131; 19 U.S.C. 

§§ 1526(3). 



  

858 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

within the 6-month period before the 
claim is filed under this section; or,  
(ii) the foreign state was designated 
a state sponsor of mass IP theft at 
the time the act described in 
paragraph (1) occurred, or was so 
designated as a result of such act, 
and either remains so designated 
when the claim is filed under this 
section or was so designated within 
the 6-month period before the claim 
is filed under this section. 

(b) LIMITATIONS AND RETROACTIVITY. 
Notwithstanding any other provision of law, 
an action may be brought or maintained 
under this section not later than the latter 
of— 

(1) the latest date permitted by the 
limitations period of the underlying 
substantive law on which the claim is 
based; or, 
(2) if the act giving rise to the claim took 
place after September 25, 2015, and 
before the enactment of this section, the 
latest date permitted by the limitations 
period of the underlying substantive law 
on which the claim is based, that period 
deemed to have begun from the date of 
this section’s enactment.  

(c) PRIVATE RIGHT OF ACTION. A foreign state 
that is or was a state sponsor of mass IP 
theft as described in subsection (a)(2), and 
any official, employee, or agent of that 
foreign state while acting within the scope of 
his or her office, employment, or agency, 
shall be liable to any United States person 
for money damages resulting from acts 
giving rise to a private civil action under the 
Economic Espionage Act (as amended),160 

 
160 See 18 U.S.C. § 1836(b). 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 859 

Copyright Act (as amended),161 Patent Act 
(as amended),162 or Lanham Act (as 
amended),163 for which the courts of the 
United States may maintain jurisdiction 
under this section for money damages. In 
any such action, a foreign state shall be 
vicariously liable for the acts of its officials, 
employees, or agents. 
(d) DEFINITIONS. For purposes of this section,—  

(1) “agent” shall mean a foreign state’s 
military and intelligence services; a 
foreign state’s agency or instrumentality 
or any of its subsidiaries; a company 
controlled by or subject to the direction 
of a foreign state’s dominant or ruling 
political party (e.g., the Chinese 
Communist Party),164 including by a 
member of central or local party state 
organizations (e.g., National People’s 
Congress, Chinese People’s Political 
Consultative Conferences);165 a company 
with corporate structures by which the 
dominant or ruling political party (e.g., 
Chinese Communist Party) of a foreign 
country exerts influence or control; or, 
an individual acting knowingly or 
willfully for the benefit of a foreign 
government, a foreign state’s dominant 
or ruling political party (e.g., the 
Chinese Communist Party), a foreign 
instrumentality, or foreign agent. 
(2) “foreign instrumentality” has the 
meaning given that term in section 
1839(1) of title 18; 

 
161 See e.g., 17 U.S.C. §§ 501, 504–05, 1203; 18 U.S.C. § 2318(e)(1). 
162 See e.g., 35 U.S.C. §§ 271, 281–97.  
163 See e.g., 15 U.S.C. §§ 1114(1), 1125(a), 1125(c)–(d), 8131; 19 U.S.C. 

§§ 1526(3) 
164 Cf. Interpretation of Foreign Entity of Concern, 89 Fed. Reg. 37079, 

37090 (May 6, 2024). 
165 See generally Milhaupt & Zheng, supra note 31, at 684. 



  

860 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

(3) “foreign agent” has the meaning 
given that term in section 1839(2) of title 
18. 
(4) “United States person” has the 
meaning given that term in section 6010 
of title 22.  

 
Defining “agent” expansively would cover China’s broad 

range of tactics to steal IP. State actors would be covered by 
the word’s ordinary definition, but it is important to add 
military and intelligence services and SOEs lest a court 
exclude them under the expressio unius rule.166 “Agency or 
instrumentality” is currently construed to cover SOEs but not 
their subsidiaries,167 so it is necessary to mention the latter 
here.  

The novelty of the “agent” definition is its inclusion of 
nominally private companies and individuals who engage in 
“non-traditional collection” of IP (and other assets and 
information) on behalf of the Chinese government.168 
Companies like Huawei, Tencent, Baidu, Xiaomi, and Lenovo 
are not state-owned but maintain close ties to the CCP and 
China’s military and intelligence services.169 Their executives 
are or have been members of the CPPCC and National 
People’s Congress, which makes them “senior . . . political 
figure[s]” in China’s government under the 2024 final rule 
issued by the Department of Energy.170 That rule recognizes 

 
166 Expressio unius, or the negative-implication canon, is a “canon of 

construction holding that to express or include one thing implies the 
exclusion of the other, or of the alternative.” Expressio Unius Est Exclusio 
Alterius, BLACK'S LAW DICTIONARY (12th ed. 2024). 

167 Dole Food Co. v. Patrickson, 538 U.S. 468, 477 (2003). 
168 Supra notes 64–68 and accompanying text.  
169 Supra notes 50–63 and accompanying text. 
170 Id.; Interpretation of Foreign Entity of Concern, 89 Fed. Reg. 37079, 

37086 (May 6, 2024). Unlike the proposed statute, the rule quantifies the 
influence necessary to establish control. It states that an entity is “owned 
by, controlled by, or subject to the direction” of another entity if “25% or 
more of the entity’s board seats, voting rights, or equity interest, with each 
metric evaluated independently, are cumulatively held by that other entity, 
whether directly or indirectly via one or more intermediate entities,” or if 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 861 

that the CCP has erased the line between public and private 
corporations, and so does this statute. 

Another way to cover those firms would be the catch-all 
provision in the definition of “agent” that refers to companies 
with corporate structures that allow a foreign country’s 
dominant or ruling political party (e.g., CCP) to exercise 
influence or control. A third option would be to define “agent” 
as including any company that has an internal Party 
committee that “provide[s] the party-state with an extralegal 
means” to influence companies “toward CCP policy 
priorities.”171 Huawei has such a committee,172 as do 
approximately three-quarters of China’s private companies 
(Chinese law requires one for all companies with at least three 
Party members).173 However, this characterization would 
conflate firms that simply employ CCP members and those 
actually run by them—a distinction Congress may or may not 
want to preserve. 

The “agent” definition must also cover “non-traditional 
collectors”174 such as talents program participants and 
Chinese government-tied researchers at companies and 
academic institutions.175 The statute may borrow from the 
Economic Espionage Act, which punishes the theft of trade 
 
the entity is subject to certain specified contractual obligations to another 
entity. Id. at 37090. 

171 Arterburn Testimony, supra note 25, at 10. 
172 Elsa Kania, Much Ado About Huawei (Part 2), AUSTL. STRATEGIC 

POL’Y INST.: THE STRATEGIST (Mar. 28, 2018), 
https://www.aspistrategist.org.au/much-ado-huawei-part-2/ 
[https://perma.cc/XFC3-46EZ]. 

173 Livingston, supra note 29, at 2.  
174 See generally Hayes, supra note 64, at 112; Case Example: Insider 

Threat and Non-Traditional Collection, supra note 64. 
175 Cf. Press Release, U.S. Dep’t of Just., Chinese National Sentenced 

for Economic Espionage Conspiracy (Apr. 7, 2022), 
https://www.justice.gov/opa/pr/chinese-national-sentenced-economic-
espionage-conspiracy [https://perma.cc/YGT4-PN8K]; Press Release, U.S. 
Dep’t of Just., One American and One Chinese National Indicted in 
Tennessee for Conspiracy to Commit Theft of Trade Secrets and Wire Fraud 
(Feb. 14, 2019), https://www.justice.gov/opa/pr/one-american-and-one-
chinese-national-indicted-tennessee-conspiracy-commit-theft-trade 
[https://perma.cc/D7FU-BJGP]; see generally Guo et al., supra note 65. 



  

862 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

secrets by anyone “intending or knowing that the offense will 
benefit any foreign government, foreign instrumentality, or 
foreign agent.”176 The definitions of foreign instrumentality 
and foreign agent should be the same as in that law.177 This 
proposal adds a reference to a foreign state’s dominant or 
ruling political party (e.g., CCP). 

The federal private right of action would permit U.S. 
victims to sue state sponsors of mass IP theft in federal court 
under the doctrine of vicarious liability. Substantive law will 
not be affected, except for the statutes of limitations. However, 
Congress might consider amending IP laws to allow 
extraterritoriality or to remove limitations on 
extraterritoriality where it is permitted.178 Punitive damages 
would be available per the underlying substantive law.179  

Plaintiffs may be any “United States person”—that is, “any 
United States citizen or alien admitted for permanent 
residence in the United States, and any corporation, 
partnership, or other organization organized under the laws 
of the United States.”180 They may bring actions under 
existing federal statutes creating liability for trade-secret 
misappropriation and infringement on trademarks, patents, 
and copyrights. They may bring these claims against the 
 

176 18 U.S.C. § 1831. 
177 See 18 U.S.C. § 1839. “(1) the term ‘foreign instrumentality’ means 

any agency, bureau, ministry, component, institution, association, or any 
legal, commercial, or business organization, corporation, firm, or entity that 
is substantially owned, controlled, sponsored, commanded, managed, or 
dominated by a foreign government; (2) the term ‘foreign agent’ means any 
officer, employee, proxy, servant, delegate, or representative of a foreign 
government.” 

178 See generally Motorola Sols., Inc. v. Hytera Commc’ns Corp., 108 
F.4th 45 (7th Cir. 2024) (Hytera, a partially state-owned Chinese company, 
appealed the district court’s extraterritorial application of the Copyright Act 
and Defend Trade Secrets Act in finding liability and calculating damages); 
KEVIN J. HICKEY ET AL., CONG. RSCH. SERV., R46532, INTELLECTUAL 
PROPERTY VIOLATIONS AND CHINA: LEGAL REMEDIES 37–39 (2020) 
(summarizing extraterritorial reach of federal IP laws); cf. Countering 
Communist China Act, H.R. 4792, 117th Cong. (2021) § 813 (“Redress of 
Theft of Trade Secrets Extraterritorially”). 

179 18 U.S.C. § 1831(a)(5). 
180 See 22 U.S.C. § 6010. 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 863 

Chinese government as well as against any individual or 
company that performed the theft. The benefit of making the 
government liable is not just that the government has deep 
pockets; it makes it easier to enforce a judgment because, per 
the amendments discussed below, the plaintiff would be able 
to execute on the commercial property of the Chinese 
government or of its SOEs. 

Except for the Lanham Act, each of the underlying IP 
statutes has its own statute of limitations (usually three to six 
years).181 As a general rule, those will continue to be in force. 
However, Congress should provide for retroactivity 
notwithstanding those rules,182 given that China’s state policy 
of mass IP theft dates back many years and U.S. victims 
would only now be receiving an opportunity for civil recourse 
against the Chinese government. Thus, this right of action 
will import the underlying laws’ limitations periods, but with 
a crucial exception: for acts of theft performed after September 
25, 2015, and before the date of this law’s enactment, the 
limitations period will begin on the day of enactment. This is 
meant to give recourse to Americans who suffered from 
China’s sponsorship of IP theft even after China’s leader 
publicly pledged to cease it.183 Courts generally uphold 
retroactive civil legislation within constitutional limits, 
especially statutes with clear statements of retroactivity.184  
 

C.  Proposed Amendments to FSIA § 1610 
 

The proposed changes to § 1610 would make it easier for 
plaintiffs to enforce judgments. Section 1605C judgment 
holders would be able to attach any kind of property of a 
foreign state used in a commercial activity, not just property 
 

181 See YEH, supra note 139, at 3. 
182 See Landgraf v. USI Film Prods., 511 U.S. 244, 270, 274 (1994) 

(courts must look for a clear statement of congressional intent before 
applying a substantive law retroactively, even when no such statement is 
necessary for “statutes conferring or ousting jurisdiction”). 

183 See Obama-Xi Joint Press Conference, supra note 147. 
184 JOANNA R. LAMPE, CONG. RSCH. SERV., IF11293, RETROACTIVE 

LEGISLATION: A PRIMER FOR CONGRESS 1–2 (2019). 



  

864 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

with a nexus to the claim. The judgment holder would be able 
to execute against the property of either the defendant-state 
or its instrumentality, usually a SOE, without regard for the 
Bancec factors.185 To protect property from attachment, the 
state sponsor might remove assets from the United States—
even then, § 1605C judgment holders would be able to execute 
on commercial liabilities owed to the foreign state’s 
instrumentalities, as when plaintiffs garnished the funds 
Sprint owed Iran’s state telecommunications company.186 

Accordingly, new subsection 1610(a)(8) would remove 
judgment immunity for the enforcement of § 1605C claims. It 
would provide (new text in italics): 

(a)  The property in the United States of a 
foreign state, as defined in section 1603(a) of 
this chapter, used for a commercial activity 
in the United States, shall not be immune 
from attachment in aid of execution, or from 
execution, upon a judgment entered by a 
court of the United States or of a State after 
the effective date of this Act, if— 
. . .  
(8) the judgment relates to a claim for which 
the foreign state is not immune under section 
1605C, regardless of whether the property is 
or was involved with the act upon which the 
claim is based. 

  
The parallel subsection for agencies and instrumentalities, 

§ 1610(b)(4), would similarly remove immunity for judgments 
arising from § 1605C claims, providing (new text in italics): 

(b)  In addition to subsection (a), any 
property in the United States of an agency 
or instrumentality of a foreign state engaged 
in commercial activity in the United States 
shall not be immune from attachment in aid 
of execution, or from execution, upon a 
judgment entered by a court of the United 

 
185 See 28 U.S.C. § 1610(g). 
186 Supra note 133 and accompanying text. 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 865 

States or of a State after the effective date of 
this Act, if— 
. . . 
(4) the judgment relates to a claim for which 
the agency or instrumentality is not immune 
under section 1605C, regardless of whether 
the property is or was involved with the act 
upon which the claim is based. 

  
Finally, § 1610(g), which abrogated the Bancec factors for 

claims against SSTs, would simply need to add “or section 
1605C” following mentions of § 1605A. This would eliminate 
the Bancec presumption that a SOE is separate from the state 
for purposes of enforcing judgments against the state. 

 
D. Section 1610(g) and State Corporate Law 

 
Congress could consider expressly preempting state 

corporate law in order to pierce the corporate veil when 
enforcing judgments against state sponsors of mass IP 
theft.187 Under § 1610(g), § 1605C judgment holders would be 
able to attach the property of the foreign state and its 
instrumentalities, i.e., SOEs that are majority-owned by the 
state.188 But what about the property of those SOEs’ 
subsidiaries, which are not “instrumentalities” of the state 
under the FSIA? Without further changes to the Act, the 
judgment holder would not be able to reach the subsidiary’s 
assets, because § 1610(g) currently allows a plaintiff to go 
down “one tier only”189—to the SOE majority-owned by the 
state, and not to its subsidiary.190 Thus the FSIA maintains 

 
187 Cf. Note, Piercing the Corporate Law Veil: The Alter Ego Doctrine 

under Federal Common Law, 95 HARV. L. REV. 853, 856 n.20 (1982) 
(providing examples of federal statutes “clearly disregard[ing] the corporate 
entity”). 

188 See 28 U.S.C. § 1603(b); Dole Food Co. v. Patrickson, 538 U.S. 468, 
477 (2003); see generally STEWART, supra note 111, at 40. 

189 STEWART, supra note 111, at 40. 
190 Though the subsidiary’s assets are out of reach, the parent’s 

controlling shares in its subsidiary could be attached. See Crystallex Int’l 
Corp. v. Bolivarian Republic of Venezuela, 932 F.3d 126, 150 (3d Cir. 2019) 



  

866 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

the presumption that a parent SOE (the “instrumentality”) 
and its subsidiary are separate juridical entities. Eliminating 
that presumption would require another amendment to the 
FSIA. 

Were Congress not to preempt state law, judgment holders 
might still be able to improve their collection prospects 
through “reverse veil-piercing.” Traditional veil-piercing 
allows plaintiffs to hold a parent company liable for the 
conduct of its subsidiary. Reverse veil-piercing goes the other 
way, making a subsidiary’s assets available to its parent’s 
creditors.191 States vary on whether they permit reverse veil-
piercing and on what factors justify disregarding the 
corporate structure.192 For example, Delaware would consider 
the reverse veil-piercing doctrine “[o]nly in cases alleging 
egregious facts, coupled with the lack of real and substantial 

 
(judgment holder against Venezuela successfully attached Venezuela-
owned energy company’s controlling shares in its U.S.-based subsidiary 
after satisfying the Bancec factors). I am grateful to Zohar Goshen for this 
idea. When a foreign state’s assets are outside the United States, a court 
would order their turnover only if (i) state jurisdictional law permits such 
an order, see FED. R. CIV. P. 69(a)(1), and (ii) once in the United States, the 
assets were found to satisfy the commercial-activity exception to judgment 
immunity under FSIA § 1610(b). See Peterson v. Islamic Republic of Iran, 
876 F.3d 63, 90–94 (2d Cir. 2017) (articulating two-step test) cert. granted, 
judgment vacated sub nom., 140 S. Ct. 813 (2020), and adopted in part, 963 
F.3d 192 (2d Cir. 2020). A court might analyze both prongs at once if the 
foreign state possesses the assets, but if a non-sovereign third party is 
holding the assets, the court might compel their recall to the United States 
before conducting the FSIA analysis. Compare Bainbridge Fund Ltd. v. 
Republic of Argentina, 690 F. Supp. 3d 411, 415–21 (S.D.N.Y. 2023) 
(denying motion to compel Argentina to turn over its extraterritorial assets 
even though New York law permitted the order, because the judgment 
debtor had failed to show the assets were excepted from execution 
immunity) with Foley v. Union de Banques Arabes et Françaises, 683 F. 
Supp. 3d 375, 392–95 (S.D.N.Y. 2023) (ordering non-sovereign bank to recall 
to New York extraterritorial assets belonging to judgment-debtor Syria and 
declining to reach the FSIA immunity analysis).  

191 Manichaean Cap., LLC v. Exela Techs., Inc., 251 A.3d 694, 710 (Del. 
Ch. 2021). 

192 Id. at 710–16 (evaluating various states’ reverse veil-piercing 
practices). 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 867 

prejudice to third parties.”193 Accordingly, whether reverse 
veil-piercing could be used to enforce § 1605C judgments will 
depend on the corporate structure in question, the facts of the 
case, and the choice of law.  

 
IV. INTERNATIONAL LAW AND STRATEGIC 

CONSIDERATIONS 
 

A. International Law 
 

Does this proposal conform with international law? As a 
matter of U.S. law, the FSIA is the “sole basis” for obtaining 
jurisdiction over foreign states.194 However, sovereign 
immunity is also a principle of customary international law,195 
which some scholars claim is “part of the relevant matrix of 
law” that U.S. courts should consider.196 A full analysis of the 
international law debates on sovereign immunity is beyond 
this Note’s scope, but this Section discusses some of the issues 
 

193 Id. at 714. 
194 Republic of Austria v. Altmann, 541 U.S. 677, 699 (2004). 
195 See William S. Dodge, Why Terrorism Exceptions to State Immunity 

Do Not Violate International Law, JUST SEC. (Aug. 10, 2023), 
https://www.justsecurity.org/87525/why-terrorism-exceptions-to-state-
immunity-do-not-violate-international-law [https://perma.cc/A9CF-7N4L]; 
Foreign Sovereign Immunities Act, U.S. DEP’T OF STATE, BUREAU OF 
CONSULAR AFFS. (Dec. 19, 2023), 
https://travel.state.gov/content/travel/en/legal/travel-legal-
considerations/internl-judicial-asst/Service-of-Process/Foreign-Sovereign-
Immunities-Act.html# [https://perma.cc/5RE9-Z89Y] (“The immunity of a 
state from the jurisdiction of the courts of another state is an undisputed 
principle of customary international law.”); Jurisdictional Immunities of the 
State (Ger v. It.), Judgment, 2012 I.C.J. 99, ¶ 57 (Feb. 3) (“[T]he rule of State 
immunity occupies an important place in international law and 
international relations”). 

196 See, e.g., Lori Fisler Damrosch, Changing Immunity Law Through 
National Decisions, 44 VAND. J. TRANSNAT’L L. 1185, 1188 (2011). 
Constitutional lawyers debate whether courts should consider customary 
international law part of the federal common law. Compare Curtis A. 
Bradley & Jack L. Goldsmith, Customary International Law as Federal 
Common Law: A Critique of the Modern Position, 110 HARV. L. REV. 815 
(1997), with Harold Hongju Koh, Is International Law Really State Law?, 
111 HARV. L. REV. 1824 (1998). 



  

868 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

implicated by this proposal. Exercising jurisdiction over state 
sponsors of IP theft is consistent with the widespread practice, 
over the last eighty years, of conferring immunity only on 
foreign states’ sovereign acts.197 

International law does not define the scope of sovereign 
immunity.198 The “restrictive” theory of immunity is now the 
most commonly used,199 but it is relatively new—most 
countries afforded foreign states absolute immunity until the 
middle of the twentieth century.200 Today there is no single 
restrictive theory. As a general matter it protects foreign 
states from suits “with regard to sovereign or public acts (jure 
imperii) . . . but not with respect to private acts (jure 
gestionis).”201 But the theory is “applied so divergently that it 
is more aptly described as an idea, doctrine, or concept which 
needs to be specified before it can be applied to a case than as 
a specific rule.”202 For example, some states have a tort 
 

197 See Dodge, supra note 195. 
198 See id.; Hersch Lauterpacht, The Problem of Jurisdictional 

Immunities of Foreign States, 28 BRIT. Y.B. INT’L L. 220, 226–29 (1951). 
199 Dodge, supra note 195. 
200 Id. Even so, immunity “finds no support in classical international 

law.” Lauterpacht, supra note 198, at 228 (“Grotius does not refer to it. 
Bynkershoek occasionally deprecates it. . . . Vattel, after admitting it with 
regard to the person of the foreign sovereign, is silent with regard to the 
position of foreign states as such.”) 

201 Permanent Mission of India to the United Nations v. City of New 
York, 551 U.S. 193, 199 (2007) (internal quotation marks omitted) (quoting 
Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 711 (1976)); 
see also Michael Akehurst, Jurisdiction in International Law, 46 BRIT. Y.B. 
INT’L L. 145, 242 (1974) (“since sovereign immunity probably no longer 
extends to acts [j]ure gestionis, the servant or agent of a State cannot claim 
immunity in respect of acts [j]ure gestionis.”). Scholars disagree on the 
definition of private act (jure gestionis): some claim it is determined by the 
conduct’s aim (which could lead to the conclusion that any government 
action should be immune because all of it can be said to serve the 
government’s ends), while others look at the conduct’s nature—“if the 
transaction could be entered into by an individual, it is one jure gestionis.” 
Clive M. Schmitthoff & Frank Wooldridge, The Nineteenth Century Doctrine 
of Sovereign Immunity and the Importance of the Growth of State Trading, 
2 DENV. J. INT’L L. & POL’Y 199, 201 (1972). 

202 Jasper Finke, Sovereign Immunity: Rule, Comity or Something Else?, 
21 EUR. J. INT’L L. 853, 874 (2010). 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 869 

exception.203 Some that have tort exceptions do not apply it to 
countries’ militaries, while others do.204 The United States’ 
terrorism exception is another variation, based on the premise 
that terrorism is not a sovereign act.205 Some countries 
presume foreign states are immune except for certain non-
sovereign acts, while others begin with a baseline of non-
immunity and carve out exceptions for sovereign activity.206 A 
similar restrictive theory applies to judgment immunity. 
Here, too, “international law contains no general rule 
prohibiting execution of domestic judgments against foreign 
states,” with some exceptions.207  

The restrictive theory balances two international law 
principles that conflict with each other in the sovereign 
immunity context: states are equal, and a state’s sovereignty 
means the right to enforce its laws against entities and people 
within its territory.208 “Immunity may represent a departure 
from the principle of territorial sovereignty and the 
jurisdiction which flows from it,” wrote the International 
Court of Justice in 2012.209 On the other hand, “[e]xceptions 
to the immunity of the State represent a departure from the 
principle of sovereign equality.”210 To preserve both interests, 
sovereign acts should be immune but a state may exercise 
jurisdiction over a foreign state’s non-sovereign acts. 
International law scholar Hersh Lauterpacht explained that 
this compromise enables the state asserting jurisdiction not to 
suffer its own sovereignty being undermined and its own 
“independence, and . . . equality . . . denied if the foreign state 

 
203 Id. 
204 Id. at 875 n.110; see Jurisdictional Immunities of the State (Ger v. 

It.), Judgment, 2012 I.C.J. 99, ¶¶ 66–76 (Feb. 3) (comparing more than 
fifteen countries). 

205 See Dodge, supra note 195. 
206 Id. 
207 James Crawford, Execution of Judgments and Sovereign Immunity, 

75 AM. J. INT’L L. 820, 860 (1981).  
208 Jurisdictional Immunities of the State (Ger v. It.), Judgment, 2012 

I.C.J. 99, ¶ 57 (Feb. 3). 
209 Id. 
210 Id.  



  

870 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

claims as a matter of right—as a matter of international law—
to be above the law of the state” where it incurred liability.211 

Stripping sovereign immunity for specific kinds of property 
torts—IP thefts—conforms with the restrictive theory’s 
principles. IP theft is a non-sovereign act. Indeed, this was 
affirmed by the United Nations Convention on Jurisdictional 
Immunities of States and Their Property—which is neither in 
force nor signed by the United States (although China is a 
signatory).212 The Convention provides that a state cannot 
invoke immunity in another’s court over “an alleged 
infringement by the State,” in the territory of the forum state, 
of rights “in a patent, industrial design, trade name or 
business name, trademark, copyright or any other form of 
intellectual or industrial property which enjoys a measure of 
legal protection in the territory of the State of the forum.”213 
That treaty language would permit U.S. courts to exercise 
jurisdiction over foreign governments in suits alleging 
industrial espionage by cyberattack and trade-secret theft of 
the type (allegedly) suffered by Apple and Monsanto (for 
example).214 Nevertheless, as a matter of U.S. law, the act of 
state doctrine might be available to a state sponsor of mass IP 
theft for its agents’ conduct within its borders, though the 
doctrine is a substantive defense and not a limit on 
jurisdiction.215  

 
 
 

 
211 Lauterpacht, supra note 198, at 229. 
212 United Nations Convention on Jurisdictional Immunities of States 

and Their Property, UNITED NATIONS TREATY COLLECTION, 
https://treaties.un.org/Pages/ViewDetails.aspx?src=IND&mtdsg_no=III-
13&chapter=3&clang=_en [https://perma.cc/5ZHM-RQGP] (last visited Oct. 
14, 2024) (listing signatories). 

213 G.A. Res. 59/38, art. 14(a) (Dec. 16, 2004), 
https://treaties.un.org/doc/source/docs/A_RES_59_38-E.pdf 
[https://perma.cc/GM4K-UYKN].  

214 See supra Part I, notes 36–68 and accompanying text. 
215 William S. Dodge, A Primer on the Act of State Doctrine, TRANSNAT’L 

LITIG. BLOG (Mar. 25, 2022), https://tlblog.org/a-primer-on-the-act-of-state-
doctrine/ [https://perma.cc/VQB2-GVDF].  



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 871 

B. Strategic Considerations 
 

How might U.S. businesses and China react to this 
proposal?  
 

i. Reactions from U.S. Businesses 
 

Individual businesses would decide for themselves 
whether to sue under § 1605C. In addition to conducting 
ordinary cost-benefit analyses, they would also need to 
consider the unique aspects of litigating against a foreign-
state defendant that may retaliate through unfavorable 
regulation or harassment. In the case of China, there is a 
substantial retaliation risk.216 Small businesses might be 
likelier to sue than large multinational companies. Smaller 
firms are less able to protect against theft and to absorb its 
costs.217 They might be less vulnerable to retaliation, 
especially if they do not operate in China. By contrast, larger 
companies are accustomed to being subjected to forced 
technology transfers by China’s regulators, and sometimes 
intimidation, in exchange for access to China’s huge market, 
labor force, and sophisticated supply chains.218 They may 
prefer not to antagonize the CCP and instead preserve market 
access by continuing to absorb the losses from theft. On the 
other hand, companies of all sizes will consider that the 
benefits of suing include recovering damages and deterring 
further thefts by showing a willingness to go to court. 
 

216 See USTR SECTION 301 REPORT 2018, supra note 2, at 9; see Wei & 
Davis, supra note 41. 

217 IP Protect, NAT’L INTELL. PROP. RTS. INFO. CTR., 
https://www.iprcenter.gov/ip-protect [https://perma.cc/V7XF-CF8P] (last 
visited Oct. 14, 2024); see generally Letter from the H. Select Comm. on the 
Strategic Competition Between the United States and the Chinese 
Communist Party and H. Comm. on Small Business to Att’y Gen. Merrick 
Garland (June 15, 2023), 
https://selectcommitteeontheccp.house.gov/sites/evo-
subsites/selectcommitteeontheccp.house.gov/files/evo-media-
document/6.15.2023-letter-to-doj-china-select-cmte.-on-small-business.pdf 
[https://perma.cc/J83Q-44TT]. 

218 See supra notes 41–44 and accompanying text. 



  

872 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

To counter this proposal, it can be argued that the 
government should not interfere in private companies’ 
apparent willingness to have their IP stolen in exchange for 
business opportunities. Companies should be free, according 
to that argument, to do business with IP thieves if they believe 
that the commercial benefits outweigh the costs.  

But this proposal would not require U.S. companies to take 
action against IP theft. It would give victim-companies the 
option either to acquiesce in China’s IP theft campaign or to 
vindicate their rights against the Chinese government as they 
would against any private IP thief. Today, they have no such 
opportunity.  

Holding China’s government accountable would serve U.S. 
national interests. Those interests are not necessarily the 
same as the aggregated interests of U.S. businesses, even if 
individual companies may sometimes be justified, in pure 
market terms, in deciding to absorb IP losses in exchange for 
Chinese business. China’s thefts, however, target specific 
sectors with the aim of aiding China strategically against the 
United States.219 It is harmful to the United States to 
participate in a world economy in which U.S. companies’ trade 
secrets and other IP are stolen without consequence. The 
United States has an interest in making it possible for U.S. 
companies to hold China accountable for mass IP theft even if 
those companies choose not to enforce their rights. 
 

ii. Reactions from China 
 

This proposal aims to stop China’s IP theft, but Beijing 
may not be so willing. China already harasses U.S. 
companies.220 Its officials might cite these amendments as a 
pretext to continue doing so. Beijing might calculate that an 
especially harsh response could deter private lawsuits 
altogether. Businesses that bring § 1605C suits would need to 
 

219 See supra Part I. 
220 See, e.g., Edward White & Kana Inagaki, China Starts ‘Surgical’ 

Retaliation Against Foreign Companies After US-led Tech Blockade, FIN. 
TIMES (Apr. 16, 2023) (on file with the Columbia Business Law Review); Wei 
& Davis, supra note 41. 



  

No. 2] THE FIRST “STATE SPONSOR OF MASS IP THEFT” 873 

prepare for the CCP to retaliate without due process. China 
might pay out the judgments entered against it, but it should 
be expected that Chinese officials would object to the exercise 
of U.S. jurisdiction over it, refuse to respond to lawsuits, and 
reject the validity of any judgments. That is why § 1610 would 
allow a U.S. judgment holder to attach property of China’s 
government and its state businesses.  

A risk of this proposal is that it could lead China to reduce 
its commerce with the United States.221 But that does not 
preclude Congress’s giving Americans a remedy for their 
stolen IP. After all, if China is unwilling to trade with the 
United States unless it can steal from Americans in the 
process, that is a strong argument for rethinking economic 
relations with China. China’s growth depends on foreign 
markets.222 Beijing benefits immensely from its commercial 
relationship with the United States,223 so it has an interest in 
not endangering its “national rejuvenation” in reacting to this 
proposal.224  

China’s own foreign sovereign immunity law contains a 
“reciprocity” section that this proposal might implicate. 
Enacted in 2023, it provides, “[i]f the immunity accorded by a 
State to the [People’s Republic of China (“PRC”)] and its 
property is less favorable than those provided by this Law, the 
[PRC] applies the principle of reciprocity.”225 This permits 

 
221 If Americans successfully enforce judgments against Chinese state 

and SOE property, China might begin removing assets from the United 
States to take them out of courts’ reach. Chinese firms have already been 
reducing their U.S. presence, and further harm to the U.S. economy due to 
this proposal could be limited—Chinese firms make up only “1.5% of the 
total asset base of multinational companies in the [United States].” 
Haneman et al., supra note 12. 

222 KAREN M. SUTTER, CONG. RSCH. SERV., IF11284, U.S.-CHINA TRADE 
RELATIONS (2023). 

223 See generally Michael Pettis, China Cannot Weaponize Its U.S. 
Treasury Bonds, CARNEGIE ENDOWMENT FOR INT’L PEACE (May 28, 2019), 
https://carnegieendowment.org/chinafinancialmarkets/79218 
[https://perma.cc/B78F-43CN].  

224 See DOSHI, supra note 13. 
225 Zhonghua Renmin Gongheguo Waiguo Guojia Huomian Fa (中华人

民共和国外国国家豁免法) [Foreign State Immunity Law of the People’s 



  

874 COLUMBIA BUSINESS LAW REVIEW [Vol. 2024 

Chinese courts “to exercise jurisdiction over the United States 
and its property in any case where U.S. law would permit U.S. 
courts to exercise jurisdiction over China and its property.”226 
This should not be of much concern to U.S. officials because 
the United States does not have a comparable campaign of IP 
theft from China.227 Of course, China could change its laws at 
will and strip the United States of immunity in part or whole. 
Were this proposal enacted, U.S. policymakers should stress 
that this is a carefully circumscribed law that pertains only to 
IP suits, and that Congress would reverse China’s state 
sponsor of mass IP theft designation once Beijing abandons its 
national policy of IP theft. 
 

CONCLUSION 
  

False distinctions between state and private actors in 
China, combined with sovereign immunity, have long allowed 
Beijing to avoid accountability for its campaign of IP theft. 
The proposed legislation would recognize that China is a 
Party-state and that U.S. law should conceive of the Party-
state’s organs as elements of the Chinese government. It 
would designate China a state sponsor of mass IP theft and 
establish a federal private right of action for Americans to 
hold Beijing liable for orchestrating those thefts. China’s 
government would lose sovereign immunity for those claims. 
Judgment holders would be empowered to collect from the 
Chinese government and its SOEs. By enacting this law, 
Congress would incentivize China to change its policies and 
help U.S. victims of China’s IP thefts obtain the remedies they 
deserve. 

 
Republic of China] (promulgated by the Standing Comm. Nat’l People’s 
Cong., Sept. 1, 2023, effective Jan. 1, 2024), art. 10, 
http://en.moj.gov.cn/2023-12/15/c_948359.htm [https://perma.cc/VUD8-
DRVK]. 

226 William S. Dodge, China’s Draft Law on Foreign State Immunity 
Would Adopt Restrictive Theory, TRANSNAT’L LITIG. BLOG (Apr. 12, 2023), 
https://tlblog.org/chinas-draft-law-on-foreign-state-immunity-would-adopt-
restrictive-theory/ [https://perma.cc/2D2S-9SRZ].  

227 Frazier & Frazier, supra note 76, at 66.